Quick answer
A layer 2 is a system built around a base blockchain to process activity with different cost or throughput trade-offs.
What is Layer 2?
A layer 2 generally executes or batches activity away from the base layer and uses the underlying chain for settlement, data, or security. The exact trust and withdrawal model depends on the design.
The useful way to approach this term is to separate its definition from the assumptions people often attach to it. In crypto, the same word can appear in a protocol rule, a user interface, a market-data label, or a marketing claim. Check which layer the explanation is describing.
Why does layer 2 matter?
Layer 2 is a category, not a guarantee. Users should check bridges, sequencers, fraud or validity proofs, withdrawal times, supported assets, and what happens if operators stop serving the system.
Concrete example
See it in a real situation
A rollup may collect many user actions, publish data or proofs to Ethereum, and let users interact at a lower apparent cost than sending every action directly on Ethereum.
Common misconceptions
What this term does not mean
- A lower fee does not mean a layer 2 has identical security or censorship properties to its base chain.
- Moving funds to a layer 2 usually involves a network-specific bridge or deposit route.
Related terms
Sources and further reading
Definitions are written for education and checked against the sources below where relevant. A source can explain a protocol or rule without endorsing every product built around it.