Layer 2 solutions meaning refers to a secondary framework or protocol that is built on top of an existing blockchain system. The main objective of these protocols is to solve the transaction speed and scaling difficulties that are being faced by the major cryptocurrency networks.
For example, Bitcoin and ETHereum are still not able to process thousands of transactions per second (TPS), and this is certainly detrimental to their long-term growth. There is a need for higher throughput before these networks can be effectively adopted and used on a wider scale.
Hence, layer 2 refers to having multiple solutions being proposed to the blockchain scalability problem. Two prominent examples of layer 2 solutions are the Bitcoin Lightning Network and the ETHereum Plasma. Both systems strive to provide increased and more efficient throughput to blockchain networks.
To be more precise, the Lightning Network is based on state channels, which are basically attached channels that perform blockchain operations and report them to the main chain. State channels are mainly used as payment channels. On the other hand, the Plasma framework consists of sidechains, which are essentially small blockchains arranged in a tree-like structure.
These solutions allow blockchain transactions and processes to take place independently of the layer 1 (main chain). Because of this, the main chain doesn’t need to go through any structural change because the second layer is added as an extra layer. As such, layer 2 solutions have the potential to achieve high throughput without sacrificing network security.
In conclusion, layer 2 solutions meaning is a secondary framework or protocol that is built upon the main chain. This solves problems such as scalability and transaction speed.
