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Definition: Layer 2 blockchain


A separate blockchain that runs alongside and augments the main blockchain. Layer 2 blockchains are designed to confirm small transactions more quickly as well as to reduce traffic on the main network. Layer 2 totals are then transmitted to Layer 1 (main network/main chain). Layer 2 blockchains, along with "sidechains" are hot topics in the crypto world because they amplify the functionality and scalability of the major blockchain networks.

The Layer 2 blockchain for Bitcoin is known as the Lightning Network. For Ethereum, "Rollups" are used. For example, "Optimistic Rollups" take seven days to confirm on the main chain, during which time a transaction can be disputed. ZK Rollups (Zero-Knowledge Rollups) hold funds in a smart contract on Ethereum. After a "validity proof" has been accepted, transactions are confirmed and the funds are available. See zero-knowledge proof and sidechain.