GlossaryIntermediate
Layer 2
A system built on or alongside a base blockchain to process activity with different performance trade-offs.
Layer 2 describes systems that extend a Layer 1 by processing some transactions away from the base chain and later posting data or proofs for settlement. The exact security and data model depends on the specific Layer 2 design.
Layer 2 networks can reduce costs or increase throughput for certain activity, but users must still consider fees, supported assets, bridges, withdrawal times, and the system's operational assumptions.
Examples
- An Ethereum Layer 2 can batch user activity before settling information to Ethereum.
- Moving funds between a Layer 1 and Layer 2 may require a bridge or a network-specific deposit and withdrawal process.