PROTOCOLS & PLATFORMS

Layer 2 (Layer 2 Scaling Solution)

Definition

Layer 2 solutions are secondary frameworks built on top of existing blockchains to improve scalability and reduce costs. They process transactions off the main chain while inheriting its security.

Example

💡 Example

Polygon, Arbitrum, and Optimism are Layer 2 solutions that offer cheaper DeFi transactions than Ethereum mainnet.

Risks to Consider

⚠️ Risks
  • Centralization risks
  • Exit delays
  • Technical complexity

Common Questions

Are Layer 2 solutions as secure as Ethereum?

They inherit Ethereum's security but may have additional risks depending on their specific implementation and centralization level.

Related Terms

Related Articles

⚔ Advanced CRV warfare: analysis of protocols built on top of Curve and Convex

The game and the fight around CRV and CVX tokens have changed in scope since my last article describing the original Curve Wars, now almost primitive. The infrastructure around Curve has become much denser with the arrival of Convex of course, but also Votium, Union Llama Airforce, Concentrator, CCRV, Lendflare, Warden, and many other protocols still in development. To assume a strategic position on CRV or CVX, one must now be able to support an investment of several tens of millions of dollars. Thus, the race to accumulate CVX and CRV has become primarily a game for DAOs or whales. More specifically, DAOs seem to prefer CVX to CRV, which represents a more favorable trade-off:
⚔ Advanced CRV warfare: analysis of protocols built on top of Curve and Convex