Layer 2 (L2)
Also called: L2 · rollup · layer two
Definition
A layer 2 (L2) is a network built on top of a layer 1 blockchain that processes transactions off the main chain and posts the results back to it, giving lower fees while borrowing much of the L1's security.
How layer 2 works
The most common Ethereum L2s are rollups. They bundle hundreds of transactions together and post a compressed summary to Ethereum. Optimistic rollups, such as Arbitrum, Optimism and Base, assume transactions are valid unless someone proves fraud during a challenge window. Zero-knowledge rollups, such as zkSync and Starknet, post cryptographic proofs that the batch is correct.
Because the cost of using Ethereum is shared across the whole batch, an L2 transaction often costs a small fraction of the same action on mainnet. L2s typically use ETH for gas, and the same 0x address format works across Ethereum and its EVM-compatible L2s.
L2s add their own risks. Some still rely on a single sequencer to order transactions or have admin keys that can upgrade the system. Moving funds back to Ethereum through an optimistic rollup's official bridge can take around a week, although many exchanges support direct deposits and withdrawals on popular L2s.
Example
Suppose you make 20 small token swaps a month. On Ethereum mainnet each swap costs about 6 USDT in gas when the network is moderately busy, so 120 USDT a month. On an L2 the same swap might cost about 0.05 USDT, or 1 USDT a month in total. If your average swap is only 100 USDT, mainnet fees would eat 6 percent per trade, while L2 fees would be 0.05 percent.
Common mistakes
- Withdrawing to an L2 address from an exchange that does not support that L2, assuming the 0x address makes it the same network.
- Having USDC on Arbitrum but no ETH on Arbitrum to pay gas.
- Expecting an optimistic rollup's native bridge withdrawal to arrive in minutes.
Learn and practise
FAQ
Are layer 2 networks safe?
Major rollups inherit much of Ethereum's security, but they also have their own risks, such as centralized sequencers, upgrade keys and bridge bugs. Maturity varies between projects.
Do I need ETH on a layer 2?
On most Ethereum L2s, yes. Gas is paid in ETH on that L2, so you need a small ETH balance on the same network.
Is Polygon a layer 2?
Polygon's original PoS chain is usually described as a sidechain with its own validators, while Polygon also builds zero-knowledge rollup technology. Check which Polygon network you are actually using.