Layer 2s (L2s)

In one minute

• What is an L2? A network that processes many transactions off the main chain (Layer 1) and periodically posts the results back to it.
• Why do this? Lower fees and higher throughput while still anchoring security to the L1.
• Main flavors: Optimistic rollups and zk-rollups. Related ideas include validiums, sidechains, and state channels.

Note: This is educational, not financial advice. Don’t share your seed phrase. Always verify official links when bridging.

Why Layer 2s exist

• Block space is scarce: Popular L1s can get congested. Fees rise when demand exceeds capacity.
• Batching & compression: L2s group many transactions together so only a compact summary is posted to L1.
• Security anchor: By posting data and/or proofs to L1, L2s inherit the L1’s security guarantees.

Core concepts (plain English)

Types of Layer 2s

Optimistic rollups

• How it works: Batches are posted to L1 with the assumption they’re correct. There’s a challenge window where anyone can submit a fraud proof if something’s wrong.
• Effects: Fast, cheap transactions on L2; withdrawals to L1 may take longer to finalize because of the challenge window.

zk-rollups (zero-knowledge rollups)

• How it works: Each batch includes a validity proof that L1 can verify. If the proof checks out, the batch is accepted.
• Effects: Near-immediate finality on L1 for batches; withdrawals are typically quicker than optimistic rollups.

Validiums & volitions (related)

• Idea: Use validity proofs (like zk-rollups) but store most data off the L1 to cut costs further.
• Trade-off: Cheaper, but data availability depends on external providers. If data is unavailable, recovery can be harder.

Sidechains (not strictly L2)

• What: Separate blockchains that run in parallel and bridge to L1, but they rely on their own security.
• Why it matters: Fees can be low, but they don’t inherit L1 security the way rollups do.

State channels & Plasma (older ideas)

• State channels: Parties transact off-chain and only post the final result to L1 (good for repeated interactions between the same users).
• Plasma: Early scaling design; inspired rollups but is less commonly used for general-purpose apps today.

Data availability (DA) — where the data lives

• On L1: Most secure for recovery; anyone can rebuild the L2 state from L1 data. Costs more.
• Off L1 (external DA): Cheaper, but depends on the DA provider staying honest and online.
• Why you care: DA choices affect cost, censorship resistance, and your ability to exit during problems.

Fees & finality

• What you pay for: An L2 fee (for the sequencer) + a small share of L1 posting costs per transaction.
• Local vs L1 finality: A transaction can feel “done” on L2 in seconds, but the batch reaches L1 finality later.
• Optimistic withdrawals: Often have a challenge delay (hours to days). zk-rollup withdrawals are typically faster.

Bridges (moving assets between L1 and L2)

• Canonical bridge: The official bridge for that L2. Usually safest & best integrated.
• Third-party bridges: Can be faster or multi-chain, but add extra smart-contract and operational risk.
• Two common patterns:
  • Lock on L1 → Mint on L2
  • Burn on L2 → Unlock on L1
• Gotchas: Wrong network, wrong token address, or unsupported assets can lead to loss. Always test with a tiny amount first.

Example: bridging step-by-step

1. Open the L2’s official bridge site from its official docs.
2. Connect your wallet on the correct network (e.g., Ethereum mainnet).
3. Select the token (often the L1’s native or a stablecoin) and enter a small test amount.
4. Approve the token (if needed), then confirm the bridge transaction.
5. Wait for confirmation. Funds arrive on L2; you’ll also need a bit of the L2’s gas token to transact.

Tip: Keep some native coin on both L1 and L2 for fees.

Risks & how to manage them

• Smart-contract bugs: Prefer audited, battle-tested systems. Still, nothing is risk-free.
• Sequencer downtime: Many L2s have a centralized sequencer today. Look for “forced transaction” or “escape hatch” features.
• Bridge risk: Bridges are high-value targets. Use official bridges and double-check URLs.
• Data availability assumptions: If data isn’t posted to L1, what happens in an outage?
• Phishing: Always verify the token contract and the bridge domain from official docs.

Choosing an L2 (simple checklist)

• What do you need? Cheap payments, NFT minting, DeFi, gaming?
• Tooling & wallets: Does your wallet support it? Are popular explorers and analytics available?
• Withdraw times: Especially important on optimistic rollups.
• Ecosystem: Are the apps you want available? Is liquidity deep enough?
• Security model: Rollup (on-chain data & proofs) vs sidechain (separate security).

Beginner mistakes to avoid

1. Wrong network: Sending funds to an address on the wrong chain or L2.
2. No gas on L2: Forgetting you need the L2’s gas token to move tokens there.
3. Imposter tokens: Copy the official token address from the project’s docs.
4. Bridging everything at once: Always test with a small transfer first.

Educational content only. Do your own research.

Quick glossary

• Rollup: An L2 that posts compressed data and/or proofs back to L1.
• Fraud proof: Evidence that a batch was invalid (optimistic rollups).
• Validity proof: Cryptographic proof a batch is correct (zk-rollups).
• Sequencer: The L2 component that orders transactions.
• Data availability (DA): Who stores the transaction data and where.
• Canonical bridge: The L2 team’s official bridge between L1 and L2.