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Layer 2


Layer 2 is a secondary framework or protocol that is developed on top of an existing blockchain. Layer 2 protocols solve some of the difficulties associated with transaction speed and scaling faced by major cryptocurrency networks. 

Understanding the term

Layer 2, in the cryptocurrency context, refers to a collective term for blockchain scaling solutions. Layer 2 inherits the features of Layer 1 and builds on top of it to improve the efficiency of the network, acting merely as an extension of the base layer. Both Bitcoin and Ethereum are still not able to provide thousands of transactions per second. This is detrimental to the growth of any blockchain, and there is a need for higher throughput.

Layer 2 helps solve this scalability problem by increasing throughput without tampering or modifying any of the original decentralization or security characteristics integral to the original blockchain. It creates a secondary framework that allows blockchain transactions and processes to take place independently of the Layer 1 main chain. This is also why Layer 2 protocols are known as off-chain scaling solutions.

The biggest advantage of using Layer 2 is that the main chain doesn’t have to experience any structural change. Layer 2 protocols can easily achieve high throughput without sacrificing network security. Some examples of Layer 2 solutions include Polygon(MATIC) and Loopring(LRC) for Ethereum and the Lightning Network for Bitcoin


Layer 2 is a collective term used to describe blockchain scaling solutions that are built on top of the layer 1 blockchain to increase transaction processing speed and scalability. Two major Layer 2 examples include Ethereum Plasma and Bitcoin Lightning Network.

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