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Glossary Term:

Layer 2

In reference to a secondary structure build on top of the existing blockchain, also called ‘off-chain’. This is created as a result of the scare and limited space available on the main layer of the blockchain. For example, Bitcoin’s main layer has a transaction capacity of roughly 400,000 transactions per day, or around 4.5 transactions per second. Further transactions can take place on secondary networks like the lightning network, or other solutions that aim to increase the transaction capacity. The main advantage of using Layer 2 means the main-chain doesn’t need to go through any forks or structural changes. Keeping the security and stability of Bitcoin as strong as possible. Layer 1 allows for security, Layer 2 allows for scalability.