What are layer 2 networks and rollups?

Layer 2 (L2) refers to a separate execution layer built on a base blockchain to help it scale. On Ethereum, a rollup executes transactions elsewhere, publishes the required data to the base chain and ties state updates to verification on that chain.

A rollup is one approach to L2 scaling. A fast sidechain does not automatically share the same security model. An independent validator set, an external data layer or administrator powers can introduce different assumptions.

Example

Suppose a rollup processes 1,000 transfers in its own environment and submits compressed data representing them to Ethereum as a batch. Instead of executing every transfer separately on the base chain, the batch shares the data cost. Acceptance of the resulting state depends on the rollup's fault-proof or validity-proof mechanism; batching alone does not establish correctness.

Users may see lower network fees. They still need to examine sequencer outages, withdrawal times and contract upgrades. The phrase “secured by Ethereum” is not an unconditional guarantee for every design.

The layer 2 economics analysis examines how fees become network revenue. The rollup selection guide covers verification and exit conditions to assess when choosing a network.