Layer 2 refers to secondary protocols or technologies built on top of a blockchain layer 1 network to increase its scalability and efficiency.
Layer 2 refers to secondary protocols or technologies built on top of a blockchain network to increase its scalability and efficiency. Layer 2 solutions are designed to help alleviate some of the performance issues associated with blockchain networks, such as slow transaction speeds and high transaction fees.
One of the most common Layer 2 solutions is the use of payment channels, which enable users to conduct off-chain transactions without requiring confirmation on the main blockchain network. Payment channels allow for faster and cheaper transactions, as well as increased privacy and security.
Another popular Layer 2 solution is sidechains, which are separate blockchain networks that are interoperable with the main blockchain network. Sidechains can be used to process transactions and execute smart contracts in a more efficient and cost-effective manner than the main blockchain network.
Other Layer 2 solutions include state channels, plasma chains, and rollups, all of which aim to increase the scalability and efficiency of blockchain networks by processing transactions off-chain or by aggregating multiple transactions into a single transaction.
Layer 2 solutions have numerous benefits for blockchain users and developers, including faster transaction processing times, lower transaction fees, and increased scalability. They can also enable the development of new applications and services that require high transaction throughput and low latency.