Technical Definition

Layer 2

A Layer 2 is a system built on top of a base blockchain to increase capacity or reduce costs while relying on the underlying chain for some security or settlement.

By Crypto University Editorial
BlockchainNodeTransaction

✦ Key Insight

Understanding the term helps readers diagnose transactions, compare blockchain designs, and understand network costs, security, and scalability.

✕ Common Misconceptions

Implementation details differ across networks. Confirm the chain-specific rules before applying assumptions from another blockchain.

Detailed Explanation

A Layer 2 is a system built on top of a base blockchain to increase capacity or reduce costs while relying on the underlying chain for some security or settlement. It describes part of the technical infrastructure or data model that allows blockchain networks and applications to operate.

In Practice

“A user or developer may encounter this concept in a wallet, block explorer, node interface, or blockchain documentation.”

Dig Deeper

Node

A node is a computer or software instance that participates in a blockchain network by storing, validating, relaying, or serving network data.

Blockchain

A shared, append-only record of transactions maintained by many independent computers at once.

Transaction

A blockchain transaction is a signed or authorized instruction that changes blockchain state or transfers value when accepted by the network.

Consensus

Consensus is the process and rule set by which distributed blockchain participants agree on valid state and transaction history.