Layer 1 (L1) refers to the base blockchain — the foundational network that processes and records all transactions directly. Bitcoin, Ethereum, Solana, Cardano, and BNB Chain are all Layer 1 blockchains. Layer 2 (L2) refers to secondary frameworks built on top of Layer 1 blockchains to solve their scalability limitations — primarily transaction speed and cost — by processing transactions off the main chain and settling results back to Layer 1.
The core problem Layer 2 solves is the blockchain trilemma: the difficulty of simultaneously achieving decentralisation, security, and scalability. Ethereum, for example, is highly decentralised and secure but can only process ~15 transactions per second (TPS) at high cost. Layer 2 solutions process thousands of TPS off-chain, bundle them, and post compressed proofs to Ethereum — inheriting Ethereum’s security while offering dramatically lower fees and faster speeds.
Major L2 types include: Optimistic Rollups (Arbitrum, Optimism) — assume transactions are valid unless challenged; ZK-Rollups (zkSync, Polygon zkEVM, StarkNet) — use zero-knowledge proofs to mathematically verify transaction batches; and State Channels (Bitcoin’s Lightning Network) — allow off-chain peer-to-peer transactions settled on-chain only when channels close.
Example: Sending ETH on Ethereum mainnet (Layer 1) costs $5–20 and takes 15 seconds. The same transaction on Arbitrum (Layer 2) costs $0.05–0.20 and takes under 1 second — while still being secured by Ethereum’s consensus mechanism.
Learn more: Ethereum.org — Layer 2 Explained
