A Layer 2 blockchain (in short L2) is a protocol that is built on top of a main blockchain (Layer 1 or parent blockchain) and operates independently.
Layer 2s were developed with the goal of solving the scalability issues of a network, improving its speed and efficiency.
Indeed, with the increasing adoption of blockchain technologies, networks have found themselves having to handle a large amount of transactions per second. The amount of data and information to be processed can lead to congestion and slowdowns in blockchain operations. This usually occurs when the amount of active users in the network is greater than the actual capacity of the blockchain to support such volumes.
Layer 2 blockchains process transactions independently of Layer 1, but use the same technologies and protocols as the parent blockchain.
The two networks are periodically connected, through bridges, to record L2 transactions on the parent blockchain.
By implementing Layer 2 technologies, it is possible to:
- Increase the amount of transactions per second (TPS), improving user experience and reducing network congestion,
- Reduce fees (such as gas fees for Ethereum) associated with each transaction,
- Maintaining the security of the blockchain.
Several Layer 2 blockchains have been developed on Ethereum, such as Polygon or Arbitrum, while Bitcoin to improve the scalability of its network uses the Lightning Network.