Settlement layer

In the modular view of blockchains, the work is split into execution, data availability, consensus and settlement. The settlement layer is where the outcome becomes authoritative: it hosts the rollup's bridge contract, verifies validity proofs or adjudicates fraud proofs, and decides which state root is final and which withdrawals can be paid. For most rollups this is Ethereum.

Settlement is what lets a rollup borrow the security of a larger chain, and it is the basis of Ethereum's pitch as a neutral base for many L2s. Some projects build on alternative settlement layers, and in Bitcoin circles the network is often described as a settlement layer for payment networks like Lightning that batch activity off-chain.

Settlement and data availability can sit on different chains, which changes the security picture: a rollup settling on Ethereum but posting data elsewhere inherits less than one that does both on Ethereum. In traditional finance settlement means the final transfer of money or securities after a trade, a related but broader meaning.