Crypto Terms:
Letter L
What is Layer 2?
Meaning:
Layer 2 -
a secondary protocol built on an existing blockchain system that helps to solve scaling and transaction speed issues.
Let's find out Layer 2 meaning, definition in crypto, what is Layer 2, and all other detailed facts.
Layer 2 is a secondary protocol developed on top of an existing blockchain system that helps major cryptocurrency networks to handle scaling and transaction speed difficulties. Large blockchains, like Ethereum, became really popular over the last few years because they are resistant to censorship and can be programmable. This means that a lot of products can be built on them and they can be used in various cases.
However, the issue with Ethereum is that it can only process 7 to 11 transactions per second, which is really not that much. A lot of users on the blockchain start to compete with each other over who will be the first to process their transactions, which leads to a bidding war over space that results in an increase in transaction prices. It even cost over $80 to send a token to another address on the Ethereum network at one point in 2021.
Layer 2 protocol was launched in order to solve problems like the one that is described above. It enables transactions to be detached from the underlying blockchain, which allows thousands of transactions to be processed per second. There are two main forms of Layer 2 protocols – Zero-Knowledge Rollups and Optimistic Rollups.
Besides, note that layer 2 solutions inherit their security from Ethereum (or other blockchains), which means that they are not dependent on any other network, validators, or businesses to secure assets.
Sharding and consensus protocol changes are two central Layer-1 blockchain solutions.<\/p>\n<p><strong>Talking about sharding<\/strong>, instead of forcing a network to operate sequentially on each transaction, it divides them into small data sets called <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-shard/">shards, which can then be handled in parallel by the network.<\/p>\n<p><strong>In terms of a consensus protocol<\/strong>, it guarantees that various blockchain operations are agreed upon <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-node/">nodes rather than a single entity. Talking about changes in consensus protocols, large blockchains like Ethereum are moving from protocols like <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-proof-of-work-pow/">Proof-of-Work (PoW)<\/strong><\/a>, which are a bit outdated and chunky, to protocols like <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-proof-of-stake-pos/">Proof-of-Stake (PoS)<\/strong><\/strong><\/a>, which are faster and waste less energy.<\/p>","definition":"a collection of solutions that enhance the protocol's core functionality.","status":"published","meta_title":"What is Layer-1 Blockchain? Definition & Meaning | Crypto Wiki","meta_description":"Layer-1 Blockchain meaning: Layer-1 Blockchain - a collection of solutions that enhance the protocol's core functionality.","meta_keywords":null}"
:prev-section="{"id":453,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Blockchain","level":"medium","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","updated_at":"2024-01-04T04:38:39.000000Z","slug":"what-is-layer-0","title":"What is Layer 0?","section":"L","keyword":"Layer 0","content":"<p>Layer 0 can be referred to as a network framework that operates beneath the blockchain. It is the very first layer among all blockchain protocols.<\/p>\n<p>It is linked with all other protocols to create interconnected value chains, providing a more upgraded and credible option compared to <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-smart-contract/">smart contracts<\/strong><\/strong><\/a>.<\/p>\n<h3>How Does Layer 0 Operate?<\/h3>\n<p>Firstly, layer 0 contains a set of state channels that authorize information running on user-defined tasks. Also part of this layer is the servers, hardware, nodes, systems, and any other device that is linked to the nodes.<\/p>\n<p>To improve network architecture, it incorporates numerous agreement techniques and P2P networks, including <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-proof-of-work-pow/">proof-of-work, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-proof-of-stake-pos/">proof-of-stake, proof-of-activity, proof-of-reputable observations, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-directed-acrylic-graph-dag/">directed acyclic graphs <\/strong><\/a><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-directed-acrylic-graph-dag/">(DAG), and others. <\/p>\n<p>Layer 0 supplements the three major pillars of blockchain such as scalability, neutrality, and resilience by providing block encryption and disguising the source of the block via P2P transmitting.<\/p>\n<p>In addition, native tokens act as a primary consensus layer, providing economic incentives to users to participate in and preserve the environment inside the HGTP network, hence creating a win-win situation in which all players are evenly valued for their contributions.<\/p>\n<p>If a user wants to create a business by utilizing layer 0 protocol, he is obligated to buy or stake the platforms’ <strong>native token<\/strong>. So, by obtaining the needed tokens within the blockchain network, he’ll be granted an entry to the layer 0 environments as well as their products, and innovative solutions.<\/p>\n<p>When they have the tokens they can also utilize them to mint their unique tokens, data validation, develop a business logic, and so on.<\/p>\n<h3>Where is Layer 0 Mainly Used?<\/h3>\n<p>One of the most significant challenges for blockchain-based systems is scalability. The Layer 0 protocol, on the other hand, might be used for a variety of purposes, including verification, setting up specific incentive schemes, digital currency wrapping, and more. <\/p>\n<p>It acts as the foundation layer, enabling cross-chain compatibility with all Layer 1 protocols like BTC, ADA, ETH, and others.<\/p>\n<p>Aside from addressing the scalability issue, the Layer 0 protocol enables users to create blockchain-based companies and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-are-decentralized-applications-dapps/">dApps, check data schemas and sources, mint money, and implement innovative business processes and KPIs.<\/p>\n<p>Likewise, operators may swiftly create relay networks across multiple nodes, like <a href=https://www.bitdegree.org/"//crypto//buy-bitcoin-btc/">Bitcoin and <a href=https://www.bitdegree.org/"//crypto//buy-ethereum-eth/">Ethereum, by utilizing the Layer 0 protocol. It provides a creative way to resolve the ecosystem's scalability problem without tampering with the establishment procedure of current blockchain networks.<\/p>","definition":"refers to the network infrastructure that runs underlying the blockchain.","status":"published","meta_title":"What is Layer 0? Definition & Meaning | Crypto Wiki","meta_description":"Layer 0 meaning: Layer 0 - refers to the network infrastructure that runs underlying the blockchain.","meta_keywords":null}"
:model="{"id":439,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Layer_2","level":"easy","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","updated_at":"2024-01-04T08:21:38.000000Z","slug":"what-is-layer-2","title":"What is Layer 2?","section":"L","keyword":"Layer 2","content":"<p>Layer 2 is a secondary protocol developed on top of an existing blockchain system that helps major cryptocurrency networks to <strong>handle scaling and transaction speed difficulties<\/strong>. Large blockchains, like <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum, became really popular over the last few years because they are resistant to censorship and can be programmable. This means that a lot of products can be built on them and they can be used in various cases.<\/p>\n<p>However, the issue with Ethereum is that it can only process 7 to 11 transactions per second, which is really not that much. A lot of users on the blockchain start to compete with each other over who will be the first to process their transactions, which leads to a bidding war over space that results in an increase in transaction prices. It even cost over $80 to send a token to another address on the Ethereum network at one point in 2021.<\/p>\n<p>Layer 2 protocol was launched in order to solve problems like the one that is described above. It enables transactions to be detached from the underlying blockchain, which allows thousands of transactions to be processed per second. There are two main forms of Layer 2 protocols – <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-zero-knowledge-rollup/">Zero-Knowledge Rollups<\/strong><\/a> and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-optimistic-rollup/">Optimistic Rollups<\/strong><\/a>.<\/p>\n<p>Besides, note that <strong>layer 2 solutions inherit their security from Ethereum (or other blockchains)<\/strong>, which means that they are not dependent on any other network, validators, or businesses to secure assets.<\/p>","definition":"a secondary protocol built on an existing blockchain system that helps to solve scaling and transaction speed issues.","status":"published","meta_title":"What is Layer 2? Definition & Meaning | Crypto Wiki","meta_description":"Layer 2 meaning: Layer 2 - a secondary protocol built on an existing blockchain system that helps to solve scaling and transaction speed issues that major cryptocurrency networks face.","meta_keywords":null,"author":{"id":1,"user_id":1,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2023-05-11T07:18:20.000000Z","title":"Editor-In-Chief","slug":"aaron-s-editor-in-chief","description":"<p>Having completed a Master’s degree on Economics, Politics & Culture for the East Asia region, Aaron has written scientific papers with a comparative analysis of the differences between US’ Western and Japan’s Collective forms of capitalism, 1945-2020.<\/p>\n<p>With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","image_id":2641,"referral_token":"05TMu2NysXOCn525","referred_by":null,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-01-09T15:22:21.000000Z","full_name":"Aaron S."}}}"
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current-chapter="L"
current-section="what-is-layer-2">
