L2 Trading

Definition ∞ L2 trading refers to conducting transactions on Layer 2 (L2) scaling solutions built atop a main blockchain, such as Ethereum. These solutions process transactions off the main chain, or Layer 1, to significantly increase throughput and reduce gas fees. L2 trading platforms offer faster execution and lower costs compared to direct Layer 1 interactions, while still deriving security from the underlying blockchain.
Context ∞ L2 trading is a prominent subject in crypto news as the industry seeks to address the scalability limitations of popular blockchains. The continued development and adoption of various L2 technologies, including rollups and sidechains, are central to enabling widespread decentralized finance (DeFi) and non-fungible token (NFT) activity, making transaction speed and cost-efficiency critical discussion points.