What is Layer 2 in Blockchain?

A layer 2 blockchain is an expansion that is added on top of a layer 1 blockchain. Layer 2 solutions are made to fix the problems that layer 1 blockchains have with scaling, like handling a few transactions at once and charging high gas fees.

As an example, Bitcoin and Ethereum still can’t handle thousands of transactions per second (TPS), which is bad for their long-term advancement. Prior to these networks being widely adopted and used, their throughput needs to be greatly improved.

Some Layer 2

Here is the list of some Layer 2 you can know:

  • Lightning Network: A layer 2 solution for Bitcoin that uses state channels to enable fast and cheap off-chain payments.
  • Polygon: A layer 2 solution for Ethereum that uses a variety of scaling techniques, including sidechains and optimistic rollups.
  • Arbitrum: A layer 2 solution for Ethereum that uses optimistic rollups to enable fast and low-cost transactions.

Within this context, “layer 2” refers to the various solutions being considered for the blockchain scalability issue. The Ethereum Plasma and the Bitcoin Lightning Network are two well-known examples of class 2 solutions. Despite having their own ways of working and unique features, both solutions aim to make blockchain systems more efficient.

The Lightning Network is based on state channels, which are basically channels that are attached to the main chain and do blockchain operations and report back to it. The main reason people use state channels is to pay for things. Sidechains, on the other hand, are basically small blockchains set up in a tree-like structure. They make up the Plasma framework.

Benefits of layer 2

Layer 2 solutions offer a number of benefits over layer 1 blockchains, including:

  • Increased scalability: Layer 2 solutions can significantly increase the transaction throughput of blockchains.
  • Reduced fees: Layer 2 solutions can reduce gas fees and other transaction costs.
  • Improved user experience: Layer 2 solutions can make blockchains more user-friendly by providing faster and cheaper transactions.

Adding an extra layer to the main chain doesn’t require any structural changes, which is one of the best things about off-chain solutions. This means that layer 2 solutions might be able to get high throughput without lowering network security.

Conclusion

Overall, the second layer can do a lot of the work that the main chain would normally do. Layer 1 is the main chain, which provides security. Layer 2 is the high-throughput layer, which can handle hundreds or even thousands of transactions per second.