Scalable Layer Two

Definition ∞ A scalable layer two refers to a secondary protocol or framework built on top of an existing blockchain, or layer one, to enhance its transaction processing capacity and reduce fees. These solutions process transactions off-chain and then periodically settle them on the main blockchain, thereby alleviating congestion. Examples include rollups, state channels, and sidechains. They aim to address the inherent scalability limitations of many foundational blockchains.
Context ∞ Scalable layer two solutions are a dominant topic in cryptocurrency news, representing a critical approach to improving the usability and adoption of decentralized applications. The race to develop the most efficient and secure layer two technologies is central to the future of DeFi, NFTs, and Web3 gaming. Discussions often revolve around security models, data availability, and the trade-offs between different scaling methods as the ecosystem seeks greater throughput and lower costs.