Layer 2 refers to a solution built on top of a Layer 1 blockchain (like Ethereum or Bitcoin) aimed at improving scalability, speed, and transaction costs, while maintaining the security of the base layer.

Layer 1 blockchains often have technical limitations: they can be slow or expensive to use during periods of high activity. Layer 2 solutions address this issue by processing transactions off the main chain (off-chain or partially off-chain), and then recording a summary or proof of these transactions on Layer 1.

Among the main Layer 2 technologies, we find:

• rollups (Optimistic Rollups such as Arbitrum, or ZK Rollups such as zkSync),

• state channels,

• and sidechains (although technically some are considered interconnected independent Layer 1s).

Layer 2 plays a crucial role in the mass adoption of blockchain, enabling faster, cheaper, and more accessible transactions, particularly for decentralized applications (dApps), DeFi, and NFTs.