What Are Second-Layer Solutions?

A set of solutions built on top of a public blockchain to extend its scalability and efficiency, especially for micro-transactions or actions. Layer-2 or second-layer solutions increase the throughput and transactions per second of a blockchain by creating additional blockspace or recording transactions in a more efficient manner. Examples include Plasma, TrueBit, Lightning Network and more.

Why Are Layer-2 Solutions Important?

Layer-1 solutions increase a blockchain's scalability and, therefore, its utility. Without them, blockchains often suffer from congestion, slow transaction speeds and high fees. Layer-2 solutions direct transactions away from the mainnet and towards its cheaper and faster alternatives.

What Are The Most Popular Layer-Two Solutions?

There are several popular layer-2 solutions for blockchains like Bitcoin and Ethereum.

Lightning Network

The Lightning Network is a second-layer solution for the Bitcoin blockchain. It allows for much higher transaction speeds and near-instant settlements of payments at quasi-zero costs. The Lightning Network enables users to open channels between parties, where they can send Bitcoin without settling the transaction on the mainnet. Upon closing the channel, the final state is broadcast to the Bitcoin mainnet.

Optimistic Rollups

Optimistic Rollups are second-layer solutions for the Ethereum blockchain. They process transactions off-chain before publishing a compressed version of the new state of the blockchain to the mainnet. Cryptographic proofs check the accuracy of optimistic rollups. Optimistic rollups greatly reduce gas fees. The Optimism protocol uses them to scale Ethereum.

Learn more in our article How to Use Layer-2 Rollups to Avoid Gas Fees.