What Is a Layer 2?
The post What Is a Layer 2? appeared on BitcoinEthereumNews.com.
Layer 2 blockchains are an important part of the Ethereum ecosystem. They are built to onboard new users and enable mass adoption of blockchain technology. But how do Layer 2 blockchains make this possible? And why are transactions cheaper and faster on L2s? This guide explains everything about Layer 2 scaling solutions. What Is a Layer 2 in Blockchain? The Definition of Layer 2 A Layer 2 network is a secondary blockchain that lives inside another network known as Layer 1. It processes and executes transactions off the main chain and sends the results to the Layer 1 chain. Layer 2 blockchains are also known as Layer 2 solutions because they solve scalability problems. Why Blockchains Need Layer 2 Solutions Layer 1 blockchains like Ethereum have scalability limitations. They need Layer 2 blockchains to handle more transactions per second (TPS) and to reduce gas fees. They also accelerate the adoption of cryptocurrencies and decentralized apps (dApps). The Relationship Between Layer 1 and Layer 2 Layer 1 is the base chain that provides security and consensus. Layer 2 handles thousands of transactions quickly and cheaply, but it still relies on a Layer 1 blockchain to verify and finalize everything. How Does a Layer 2 Work? Off-Chain Processing and On-Chain Settlement Layer 2 blockchains are compatible with Ethereum. Users can send and receive tokens or interact with smart contracts on them. An L2 uses a different mechanism to compute and process transactions off-chain, making it highly scalable. Next, L2s lump transactions together and send them to the base layer. This step depends on the type of Layer 2 solution being used. Some solutions send a cryptographic proof to the base layer. Others assume all transactions are valid. Finally, L2s send the data to L1 through a smart contract. The base layer resolves…
