L2 Networks

Definition ∞ L2 networks, or Layer-2 networks, are secondary frameworks built on top of existing blockchain protocols, primarily Ethereum, to enhance their scalability and transaction throughput. These solutions process transactions off the main blockchain (Layer-1) and periodically batch or commit them back to the Layer-1 for final settlement. Examples include rollups, sidechains, and state channels, all designed to reduce fees and increase transaction speed. They address core limitations of foundational blockchains.
Context ∞ The emergence and development of L2 networks are central to the ongoing efforts to scale blockchain technology and support widespread decentralized application adoption. Discussions frequently focus on the trade-offs between different L2 approaches concerning security, decentralization, and efficiency. A critical future development involves the continued maturation and interoperability of these networks, which will be essential for creating a robust and high-performing multi-chain ecosystem capable of handling global transaction volumes.