I have just learned more about Layer 2 and realize that it is a very important part of the next development of blockchain. In fact, Layer-1 blockchains like Ethereum or Bitcoin all face similar problems—they find it difficult to achieve three things at the same time: decentralization, security, and scalability. That is precisely why Layer 2 was created.

The way it works is quite interesting. Instead of processing all transactions on the main chain, Layer 2 handles them off-chain, then batches the transactions and sends the results back to the main chain. This significantly reduces congestion. As a result, transactions become much faster, and fees are very low, making it ideal for high-frequency applications like DeFi or gaming.

Currently, there are three main approaches. Optimistic Rollups (such as Optimism and Arbitrum) operate by assuming transactions are valid unless someone proves otherwise. ZK-Rollups use zero-knowledge proofs to verify batches of transactions, providing higher security. Meanwhile, State Channels and Sidechains allow off-chain interactions or operate independently but connect to the main network.

Looking at popular Layer 2 tokens, Polygon is a giant. It offers PoS sidechains and zk-rollups, processing billions of transactions with a very large DeFi and NFT ecosystem. Arbitrum uses Optimistic Rollups and has stored many major DeFi protocols; its current price is $0.11, up 2.23% in 24 hours. Optimism is another prominent Optimistic Rollup solution, currently priced at $0.13, up 2.74%, well-known for its good compatibility with Ethereum.

There are other notable projects as well. Immutable X is designed for NFTs and gaming, using zk-rollups, priced at $0.18, up 2.52%. zkSync is a leader in zk-rollup technology, currently at $0.02, up 1.09%. Mantle is a newer Optimistic Rollup with a modular structure, priced at $0.68, up 4.23%—a strong increase. Loopring is a Layer 2 DEX protocol using zk-rollups, currently at $0.02, down 0.23%.

For Bitcoin, Stacks brings smart contract and dApp capabilities, priced at $0.25, up 2.75%. Core DAO offers EVM-compatible DeFi tools for Bitcoin, currently at $0.04, up 0.77%. Merlin Chain and Elastos are smaller networks focused on governance, at $0.03 (up 3.02%) and $0.46 (up 0.80%), respectively.

However, Layer 2 also faces challenges. Deployment is quite complex and requires deep cryptographic knowledge. Some projects rely on limited validators or centralized checkpoints, which can pose risks. Additionally, interoperability between different Layer 2 solutions remains limited; they do not connect seamlessly with each other. Vulnerabilities in Layer 2 contracts can also impact security.

Looking to the future, Ethereum’s roadmap heavily depends on expanding Layer 2 to reach 100,000 TPS. There are projects working on cross-layer and cross-chain integrations, aiming to unify liquidity between L1 and L2. It seems Layer 2 will be the key to truly serving millions of users. I will continue to follow the development of these projects, especially those with good momentum like Mantle and Stacks.