Layer 2 refers to secondary protocols or technologies built on top of a Layer 1 blockchain to enhance its scalability, speed, and efficiency without altering the underlying protocol. These solutions aim to offload some of the transactional workload from the main blockchain, reducing congestion and increasing throughput. Examples of Layer 2 solutions include the Lightning Network for Bitcoin and Plasma or Rollups for Ethereum. These protocols enable faster and cheaper transactions by processing them off-chain while still relying on the security and decentralization of the Layer 1 blockchain for final settlement. Layer 2 solutions are essential for scaling blockchain networks to handle a higher volume of transactions and supporting the broader adoption of blockchain technology across various applications.
