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Layer 2 Blockchain Meaning

A secondary protocol built on top of an existing Layer 1 blockchain. The goal of a Layer 2 (L2) is to increase the scalability and speed of the network by processing transactions "off-chain" and then bundling them together to be settled in a single "proof" on the Layer 1.

By moving the bulk of the computational work away from the main chain, L2s can offer significantly lower fees and near-instant transaction speeds. They inherit the security of the underlying L1, meaning that as long as the L1 is secure, the assets on the L2 are also safe.

Examples of Layer 2s include the Lightning Network (for Bitcoin) and Arbitrum, Optimism, or Base (for Ethereum).

L2s are the primary way that the industry plans to reach "mass adoption," as they allow the network to handle millions of users and micro-transactions that would be impossible to process directly on a Layer 1.

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