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Redirected from: Level 2 chain

Definition: Layer 2 blockchain


A blockchain that confirms transactions faster than a major blockchain network. Layer 2 chains are often designed to handle small transactions (micropayments) with lower fees or no fees, as well as to reduce traffic on the main network. At periodic intervals, Layer 2 summaries are transmitted to Layer 1 (main network/main chain) where they are "cast in concrete" and cannot be altered.

Following are the various Layer 2 approaches for Ethereum. For Bitcoin's Layer 2 approach, see Lightning Network. Layer 2 networks may also enhance the functionality of the major blockchain networks, and these auxiliary networks are hot topics in the crypto world. See blockchain and Polygon.

Sidechains
A sidechain is an independent blockchain with its own validators and consensus method for adding blocks. It employs a bridge to the main chain. See sidechain.

Plasma Chains
Like sidechains, plasma chains have their own consensus algorithm, but plasma operates in a tree hierarchy allowing an unlimited number of "child chains" to be created. The root of each chain is published on the main Ethereum network.

Payment Channels
Crypto is deposited on the main blockchain, and a channel between two parties is opened up on Layer 2. Payment channels are popular but closing the channel can take up to 24 hours to confirm, and the channel only works between two parties.

Rollups
Rollup chains send snapshots of their blocks to the main chain. "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. After proof of validity is accepted, transactions are confirmed and the funds are available. See zero-knowledge proof and Optimistic Ethereum.