Layer 2 Scaling Solutions

Layer 2 scaling solutions are a spectrum of blockchain architectures built on top of base layer (L1) blockchains—including optimistic rollups (which assume transactions are valid and only verify on dispute), ZK rollups (which use zero-knowledge proofs to verify transactions), application-specific validiums (which store data off-chain but verify on-chain), and payment channels (which enable off-chain transactions that settle on-chain)—that provide cheaper and faster transaction settlement while inheriting the security of the underlying L1 blockchain. These solutions enable mainstream transaction volumes for DeFi applications and central bank digital currencies (CBDCs) by moving computation and data storage off the main chain while maintaining security guarantees, addressing the scalability limitations of base layer blockchains.

This innovation addresses the scalability bottleneck of blockchain systems, where base layer blockchains can only process limited transaction volumes. By moving transactions to layer 2, these solutions can dramatically increase throughput. Companies, blockchain projects, and research institutions are developing these technologies.

The technology is essential for enabling blockchain systems to scale to mainstream usage, where high transaction volumes are necessary. As blockchain adoption grows, scaling solutions become increasingly important. However, ensuring security, managing complexity, and achieving interoperability remain challenges. The technology represents an important evolution in blockchain scalability, but requires continued development to achieve the security and usability needed for widespread use. Success could enable blockchain systems to scale to mainstream usage, but the technology must prove its security and achieve widespread adoption. Layer 2 solutions are becoming increasingly important as blockchain usage grows.