Overview
Layer 2 solutions handle transactions 'off-chain' and then periodically settle them on the main Layer 1 blockchain. This reduces the load on the L1 and allows for much lower fees and faster confirmation times.
Types
- Rollups: Bundle many transactions into one (e.g., Arbitrum, Optimism).
- State Channels: Allow users to transact privately and only settle the final balance (e.g., Lightning Network).
- Sidechains: Independent blockchains that are compatible with the L1 (e.g., Polygon PoS).
Security
L2s typically derive their security from the underlying Layer 1, meaning if the L1 is secure, the L2 is also considered secure.