Layer 2 (L2): how it speeds up the network and lowers fees
Layer 2 (L2) is a network that runs on top of a main blockchain, speeding up transactions and lowering fees while relying on its security.
English term: Layer 2
A layer 2 (layer 2, L2) is a solution built on top of the main blockchain, i.e. the layer 1. It processes transactions off that chain and sends only a summary or proofs of their validity to the main network. This makes transactions faster and cheaper, while security is largely provided by the layer 1. Examples include rollups, which are batches of bundled transactions, and payment channels.
L2 solutions have their own risks: they may rely on centralized components, such as a sequencer, withdrawals to layer 1 can be delayed, and security also depends on the code of bridges that move funds. They differ in quality and degree of decentralization, so not every “layer 2” is as secure as the main network.
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This entry explains a concept and is not an investment recommendation. Cryptocurrencies and leveraged trading carry a risk of losing money. Risk Warning.
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