Best Layer 2 Crypto Networks

Best Layer 2 Networks

After reviewing more than 15 Ethereum Virtual Machine (EVM)-compatible and non-EVM chains, we have identified the top five layer 2 networks. These networks excel in security, validator distribution, application support, user experience, scalability, and fees. They leverage advanced technologies like Optimistic and ZK-Rollups for efficient transaction bundling, as well as State Channels and Plasma for off-chain transactions. These features make them leaders in onchain scaling and performance.

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1. Arbitrum

Arbitrum stands out as a leading layer 2 network on Ethereum, enhancing scalability and efficiency. It improves Ethereum's performance by batch-processing transactions, resulting in faster and more cost-effective operations. Arbitrum is known for its strong security, complete smart contract compatibility, and vibrant DeFi ecosystem. Powered by the Arbitrum Nitro Stack, which includes Arbitrum Rollup and AnyTrust technologies, it increases throughput, lowers transaction costs, and maintains Ethereum compatibility.

With a Total Value Locked (TVL) exceeding $2.97 billion, Arbitrum has earned significant user trust. Its integration with top applications like GMX and Radiant highlights its importance in the Ethereum ecosystem. Arbitrum's diverse product suite, including innovative solutions like Orbit and Stylus, solidifies its role as a major force in Ethereum's development, particularly in DeFi and web3.

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2. Optimism

Optimism ranks second among Ethereum's layer 2 solutions, known for its use of optimistic rollups technology. This method improves scalability and transaction speed by consolidating multiple transactions into batches on Ethereum's main chain. Optimism is celebrated for its strong security, full smart contract functionality, and active DeFi ecosystem.

With a Total Value Locked (TVL) of $846 million, Optimism has become a significant hub for DeFi, attracting many Ethereum users. The recent Optimism Bedrock upgrade enhances its performance and supports other layer 2 solutions like Base and Worldcoin by implementing the OP Stack. This upgrade not only boosts these platforms' capabilities but also allows Optimism to earn a share of fees from networks utilizing the OP Stack.

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3. zkSync

zkSync is the third top layer 2 solution for Ethereum, utilizing advanced zero-knowledge (ZK) technology to boost Ethereum's throughput while upholding key values like decentralization and security. It is known for its trustlessness, strong security, and community-driven ethos. zkSync aims for hyperscalability, handling unlimited transactions efficiently without compromising security or cost, achieved through its innovative ZK Stack and hyperchain framework.

zkSync's security is evident in its ZK-rollups, particularly Era, which fully inherits Ethereum's security strengths. With over 230 million transactions and 1 million+ contracts deployed, zkSync emphasizes a secure and user-friendly experience. Holding a TVL of $150 million and partnering with major projects like Chainlink, zkSync leads blockchain innovation. Its solutions for affordable computation, storage, and unlimited throughput make zkSync a crucial player in enhancing blockchain scalability and accessibility.

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4. BOB (Build on Bitcoin)

BOB (Build on Bitcoin) is a cutting-edge layer 2 platform that merges Bitcoin’s security with Ethereum’s smart contract flexibility. By integrating Bitcoin's large user base and liquidity with Ethereum’s EVM capabilities, BOB provides a robust environment for decentralized applications, stablecoins, and NFTs. This hybrid platform enables application development and deployment without hard forks, bridging the gap between these major blockchain networks.

BOB uses a hybrid architecture that combines Bitcoin's PoW security with an Ethereum-native bridge, creating a versatile platform for decentralized applications. With a Total Value Locked (TVL) of $42 million, BOB is notable for its innovative approach to integrating Bitcoin and Ethereum functionalities. It employs optimistic rollups and ZK improvements to enhance scalability and security, providing developers with a sophisticated environment for efficient application development.

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5. Base

Base, developed by Coinbase, ranks as the fifth-leading Ethereum layer 2 solution, leveraging Optimism's OP Stack. Known for its affordability, security, and user-friendly interface, Base aims to extend Ethereum's reach to a broader audience. By combining Coinbase's extensive user base with Optimism's advanced technology, Base offers an accessible and cost-effective blockchain experience.

With a Total Value Locked (TVL) of $1.67 billion and daily transaction fees averaging $75,000, Base has quickly established a strong presence in the Ethereum community. It supports all EVM-compatible codebases, making it easy for users to transition from Ethereum L1 and other chains. Leading applications on Base, such as Friend Tech and Aerodrome, demonstrate its growing influence in the SocialFi and gaming sectors, underscoring the platform's increasing trust and adoption.

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What is an Ethereum Layer 2?

An Ethereum Layer 2 is a secondary network that reduces the main chain's workload, speeding up transactions and lowering costs. It acts as an assistant to Ethereum, handling tasks separately but still seeking final approval from the main chain.

Here are the key features and characteristics of layer 2's on Ethereum.

• Sidechains: Independent blockchains connected to Ethereum via two-way bridges. They lock assets on Ethereum, process transactions on the sidechain, and then unlock the original tokens on Ethereum.
• Blockchain Rollups: Combine multiple transactions into one for Ethereum. There are two main types: Optimistic Rollups, which assume transactions are valid unless challenged, and Zero-Knowledge (ZK) Rollups, which use 'validity proof' for transaction verification.
• Plasma and State Channels: Plasma creates scalable child chains linked to Ethereum, while State Channels enable off-chain transactions with on-chain settlements.

These Layer 2 solutions improve Ethereum's scalability and efficiency, supporting the growth of dApps, DeFi protocols, and NFTs.

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What is a Bitcoin Layer 2?

A Bitcoin Layer 2 is a secondary network built atop the Bitcoin blockchain (e.g. BOB)to improve its scalability and transaction speed. These networks process transactions off the main chain, reducing congestion and fees, while still leveraging Bitcoin's robust security model. Examples include the Lightning Network, which facilitates fast, low-cost payments, and sidechains like Liquid, which offer additional features such as asset issuance.

However, Bitcoin Layer 2 solutions are generally considered less secure than EVM-based Layer 2s due to Bitcoin's limited native programmability. This lack of flexibility restricts the implementation of advanced security features and smart contract functionalities, making Bitcoin Layer 2s more reliant on external mechanisms to ensure security and operational integrity. Despite these limitations, Bitcoin Layer 2s play a crucial role in enhancing the usability and efficiency of the Bitcoin network.

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Bottom Line

Layer 2 solutions are revolutionizing blockchain scalability for both Ethereum and Bitcoin. By processing transactions off the main chain, these technologies enhance speed and reduce costs while ensuring security. This guide covers five top Layer 2 platforms: Arbitrum, Optimism, zkSync, BOB, and Base.

Each excels in user growth, developer activity, and decentralization, significantly impacting their ecosystems. As the need for scalable blockchain solutions increases, these Layer 2 networks are crucial in supporting decentralized applications, DeFi protocols, and NFTs.