How it works
Layer 1 chains run their own validators and finalise their own transactions. Layer 2 networks batch many user transactions off the main chain, compute the result, and post a compact proof or summary back to Layer 1. The Layer 1 inherits security; Layer 2 inherits scale. Major Layer 2 architectures include optimistic rollups (Arbitrum, Optimism, Base), zk-rollups (zkSync, Starknet), and state channels.
Example
A swap on Ethereum mainnet costs $5 to $30 in gas during normal conditions. The same swap on Arbitrum (a Layer 2) costs about $0.10 and confirms in 1 second instead of 12 seconds. Arbitrum periodically posts a transaction batch back to Ethereum, where it benefits from Ethereum’s security. If Arbitrum’s operators go offline, users can still withdraw funds to Layer 1 via a proof on the chain.
Why it matters
Layer 1 throughput is fundamentally constrained by the cost of running independent validators. Layer 2 sidesteps that constraint while inheriting Layer 1’s security. Most active crypto users now hold and trade on Layer 2 to escape Layer 1 fees. The trade-off is fragmentation: liquidity, balances, and applications split across dozens of Layer 2s and bridges, with operational complexity for users.
