What Is a Layer 2?

A Layer 2 is a protocol built on top of a Layer 1 that does most of its transaction processing elsewhere, then periodically checks in with the base layer. It doesn't need its own army of validators from scratch - it leans on the L1's existing security instead.

That's the key difference from just building a brand-new, separate blockchain: a well-designed Layer 2 is only as trustworthy as its connection back to the L1 lets it be.

A component called a sequencer collects transactions and orders them, much faster and cheaper than the base layer could on its own. Periodically, a summary of what happened - compressed data, and often a proof - gets posted back to the Layer 1.

Once that summary is on the L1, it inherits the L1's guarantees: the data is public, and the L1's own security now backs up the L2's history. Different Layer 2 designs differ mainly in how they prove that summary is honest - the subject of the next lesson.

Posting to a Layer 1 costs money - it's competing for the same limited block space as everyone else. A Layer 2 batches hundreds or thousands of transactions into one L1 posting, so that cost gets split across everyone in the batch instead of paid individually.

That's the practical payoff for users: transactions that might cost dollars directly on the L1 can cost fractions of a cent on a well-used Layer 2.