What it is
A Layer 2 (L2) solution is a separate blockchain or protocol built on top of a Layer 1 (L1) blockchain, such as Ethereum, to enhance its throughput and reduce transaction costs. L2s process transactions off the main chain, then periodically submit aggregated proofs or data back to the L1, leveraging the underlying chain's security. This design allows the L1 to maintain its decentralization and security while the L2 handles the bulk of transaction execution.
Layer 2 solutions, particularly rollups, are central to Ethereum's scaling strategy. They enable faster, cheaper transactions for users, making DeFi and NFT applications more accessible. Retail investors often use L2s to avoid high gas fees on the Ethereum mainnet. News coverage frequently discusses the growth of L2 ecosystems, their total value locked, and new applications launching on them. Understanding L2s is crucial for navigating the broader Ethereum ecosystem.
Why it matters
Layer 2s offer cheaper and faster transactions on Ethereum, making crypto activities more accessible and affordable.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice