Key Points

  • A Layer 1 is a base blockchain that orders, executes and settles its own transactions. Bitcoin, Ethereum and Solana are all Layer 1s.
  • A Layer 2 runs on top of a Layer 1. It processes transactions away from the main chain, then posts data or proofs back to it, so it can borrow the Layer 1's security.
  • Rollups are the main Layer 2 design on Ethereum. Optimistic rollups treat batches as valid unless someone challenges them; zero-knowledge rollups post a cryptographic proof with each batch.
  • Layer 2 fees fell sharply after Ethereum's Dencun upgrade in March 2024 gave rollups cheaper space for their data, and later upgrades have added more of that space.
  • Layer 2s are not equally safe. Many still rely on upgrade keys or a single operator, so it is worth checking how a network is run before you hold funds on it.

Quick Answer

A Layer 1 blockchain is the base network that records and settles transactions itself, such as Bitcoin or Ethereum. A Layer 2 is a separate network built on top of it that handles transactions more cheaply and then reports back to the Layer 1, which acts as the final record. Read the split as a trade-off: the Layer 1 gives security and finality, the Layer 2 gives speed and lower fees. The common misread is that every Layer 2 is as safe as the chain beneath it. Many still depend on a small group that can upgrade or pause the system.

What is a Layer 1 blockchain?

A Layer 1 is a blockchain that does all of its own work: it collects transactions, puts them in order, runs them and records the result in a ledger that its own network secures. Nothing sits underneath it.

Bitcoin is the original example. Miners secure it with proof of work and a new block arrives roughly every ten minutes on average. Ethereum moved from proof of work to proof of stake in September 2022 and produces a block every 12 seconds. Solana, Avalanche and Cardano are other Layer 1s, each with its own design choices.

Every Layer 1 balances three things that pull against each other: security, decentralisation and capacity. Making blocks bigger or faster raises capacity, but it also makes running a node more demanding, which can push out smaller operators and concentrate control. Bitcoin and Ethereum have chosen to keep their base layers relatively easy to verify and to add capacity elsewhere. That choice is the reason Layer 2s exist.

What is a Layer 2 and how does it work?

A Layer 2 is a network that handles transactions off the main chain and then settles the results on it. You get lower fees and faster confirmation, while the Layer 1 remains the final record of who owns what.

The common pattern on Ethereum is the rollup. A rollup collects hundreds or thousands of transactions, runs them on its own system, compresses the result and posts it to Ethereum in one batch. Because that data lands on Ethereum, anyone can rebuild the rollup's state from it. If the rollup's operator stops working or misbehaves, users can, in a well-designed rollup, use the data on Ethereum to prove what they own and withdraw it.

That last point is what separates a true Layer 2 from a fast, cheap but separate chain. The security comes from being able to fall back on the Layer 1.

What is the difference between optimistic and zero-knowledge rollups?

Both bundle transactions and post them to Ethereum. They differ in how Ethereum is convinced that the batch is correct.

Optimistic rollups assume each batch is valid and allow a window, usually about seven days, in which anyone can submit a fraud proof to challenge it. That window is why withdrawing directly from an optimistic rollup to Ethereum through its official bridge takes about a week. Arbitrum One, OP Mainnet and Base are optimistic rollups.

Zero-knowledge rollups attach a validity proof to each batch: a piece of cryptography that Ethereum checks before accepting the result. Once the proof is verified, the batch is final, so withdrawals do not need a week-long challenge period. The cost is that generating proofs takes heavy computation. zkSync Era, Starknet, Linea and Scroll use this approach. There is more detail in our guide to zk-rollups.

Is the Lightning Network a Layer 2?

Yes. The Lightning Network is the best-known Layer 2 for Bitcoin. Two parties lock bitcoin in a shared channel on the main chain, then send payments to each other off-chain as often as they like. Only the opening and closing of the channel touch Bitcoin itself, and payments can route across a network of channels. It suits small, frequent payments rather than long-term storage. See our Lightning Network guide for how channels work.

Are sidechains the same as Layer 2s?

No. A sidechain is a separate blockchain with its own validators that connects to a Layer 1 through a bridge. It can be fast and cheap, but its security comes from its own validators, not from the Layer 1. If those validators fail or collude, the Layer 1 cannot step in to protect users. Polygon's PoS chain has long run this way, which is why it is usually described as a sidechain rather than a rollup.

Why did Layer 2 fees fall so much?

Most of a rollup's cost is the fee it pays to post its data to Ethereum. Three upgrades have cut that cost.

  • Dencun, March 2024. Introduced blobs (EIP-4844), a cheaper, temporary type of data space reserved for rollups. Rollup fees dropped sharply once their data moved into blobs.
  • Pectra, May 2025. Raised the number of blobs each block can carry.
  • Fusaka, 3 December 2025. Introduced PeerDAS, which lets nodes check that blob data is available by sampling pieces of it rather than downloading all of it. That makes room for more blobs, and the upgrade set out further blob increases to follow.

Source: Ethereum Foundation, Fusaka mainnet announcement, 6 November 2025; Ethereum Improvement Proposal 4844.

Fees on a Layer 2 still rise when that network is busy, because each rollup also prices its own block space. Our guide to gas fees covers how those charges are set.

What are the risks of using a Layer 2?

A Layer 2 can inherit Layer 1 security in principle, but many are not there yet. The main risks to check are these.

  • Upgrade keys. Many rollups can still be changed by a small group or a security council. If that group can upgrade the contracts instantly, users rely on trusting it.
  • A single sequencer. Most rollups use one operator to order transactions. It can go down, delay transactions or, in theory, refuse some of them.
  • Withdrawal routes. Official bridges on optimistic rollups take about a week. Third-party bridges are faster but add their own smart contract risk. Our bridges guide covers what to look for.
  • Split liquidity. The same asset can sit on many Layer 2s, and moving between them costs time and fees.

L2BEAT, an independent research site, rates rollups in stages. Stage 0 depends heavily on its operators, Stage 1 adds limits on what they can do, and Stage 2 is close to fully governed by code. Checking a network's stage before you hold funds there takes a minute and tells you how much trust you are placing in people rather than code.

How should you think about Layer 1 versus Layer 2?

Think of the Layer 1 as the place where settlement is final and the Layer 2 as the place where activity is cheap. Holdings you plan to keep untouched for years sit naturally on the base layer. Frequent, small transactions, such as using applications or sending stablecoins, often make more sense on a Layer 2, as long as you understand the network's risks and how you would get your funds back to the Layer 1. If you are moving funds onto Base for the first time, our Base bridging guide walks through it.

Frequently Asked Questions

Is Solana a Layer 1 or a Layer 2?

Solana is a Layer 1. It settles its own transactions and uses its own validators, with a design that favours high capacity on the base layer.

Do Layer 2s have their own tokens?

Some have governance tokens, such as ARB for Arbitrum and OP for Optimism. On most Ethereum rollups you still pay transaction fees in ETH, so you do not need the network's token to use it.

Can I move funds from a Layer 2 back to Ethereum?

Yes, through the network's official bridge. On optimistic rollups that takes about a week. Zero-knowledge rollups are usually faster once a batch's proof is verified.

What is a Layer 0?

A Layer 0 is infrastructure for building and connecting several blockchains, such as Polkadot's relay chain. It sits beneath a family of chains rather than on top of one.

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Further Reading

Sources

  • Ethereum Foundation, Fusaka mainnet announcement, 6 November 2025: blog.ethereum.org
  • EIP-4844 (proto-danksharding, introduced in the Dencun upgrade): eips.ethereum.org
  • L2BEAT, rollup risk framework and stages: l2beat.com

This article is for education only and is not financial, investment or legal advice. Crypto assets are volatile and you can lose some or all of the money you put in. Layer 2 networks, bridges and smart contracts carry technical risks, including bugs, operator failure and loss of funds. Do your own research and consider independent advice before making any financial decision.