What it means
Relationship to Layer 1
A Layer 2 moves some activity away from the base chain while retaining a defined connection to it. The term is used differently across ecosystems; the security mechanism and settlement arrangement matter more than the label alone.
Evaluating a network
In the Ethereum context, rollups are an important Layer 2 approach. Other systems may make different assumptions about data availability, operators and withdrawal mechanisms. Payment teams should inspect bridge risks, administrative powers, fees and the distinction between a fast user confirmation and settlement on Layer 1.
Related concepts
In practice
A concrete example
A merchant compares an L2 payment notification with the network’s documented settlement and withdrawal process before choosing a fulfilment policy.
Technical notes & boundaries
A sidechain is not automatically a Layer 2. Lower fees, instant finality and identical security are not universal properties of L2 systems.
Go to the source.
Original references used for this definition. Product details and standards can change.