Best layer 2 solutions: How they work and which to choose

Blockchains changed how we think about money and digital ownership. They proved that decentralization works, but they introduced new concerns as well. Performance is one of those challenges – Bitcoin (BTC) can only handle about seven transactions per second, for instance, and Ethereum (ETH) manages fifteen to thirty.

That speed was considered fine when most on-chain activity involved basic transfers and low transaction volumes. But as decentralized apps (dApps), NFTs, and DeFi projects exploded in popularity, millions of new users flooded the networks. Transactions took longer to process and fees climbed higher. During peak periods on Ethereum, traders would pay over $100 to send a single transaction or interact with a smart contract.

These issues pushed developers to build the best layer 2 (L2) solutions – scalable execution environments designed to make blockchain technology faster, cheaper, and ready for mass adoption. In this article, we’ll explain how L2 solutions work and introduce seven top options.

What are layer 2 solutions?

L2 networks process transactions off-chain in batches, and then anchor the results to a primary layer 1 (L1) blockchain. Once those batches are verified or the “challenge” period ends, they’re finalized on the L1. This approach lets L1s serve as secure settlement layers, while L2s focus on efficient execution. By submitting only summary data instead of every transaction, L2s dramatically cut costs for end users and increase the network’s effective transaction capacity.

Imagine the Ethereum blockchain as a one-lane highway where every car – or in our case, transaction – must stop at the same toll booth before moving on. When traffic builds up, everything slows down. L2 adds express lanes beside that highway. Two people can open a lane, exchange as many payments as they like, and report the final total to the main “highway” (i.e., blockchain) once they’re done.

Types of layer 2 solutions

Rollups are by far the most popular type of L2 network, accounting for the most value and activity as of late 2025. This solution bundles hundreds (or even thousands) of transactions off-chain, then posts compressed data to the main blockchain. 

There are two types of rollups, based on how they verify transactions:

• Optimistic rollups: These L2s assume transactions are valid, but incorporate a “fraud proof” period. This creates a window for external validation and challenge by network participants before transactions are finalized on L1.
• ZK rollups: These use zero-knowledge proofs to confirm that all bundled transactions are valid, before sending a single, compact proof back to the main blockchain. This proof acts as cryptographic evidence that everything processed off-chain followed the rules, making the L1 verification process almost instant.

Sidechains are often grouped with L2 solutions, but they’re actually independent blockchains that interact with the main blockchain via bridges. Similarly, plasma chains bundle transactions and submit them in groups. Although sidechains and plasma chains aren’t technically L2 networks, they’re often placed in that category and offer many of the same benefits.

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7 of the best layer 2 crypto solutions

L2 networks tackle the problem of scalability head-on, by processing activity off-chain while staying connected to L1 for verification. Below are seven of the most popular and widely used L2 solutions leading that shift.

1. Arbitrum

Arbitrum is one of the largest L2 networks, securing about $19B in total value locked (TVL). This solution batches transactions off-chain and settles to ETH through fraud proofs after a challenge window. This cuts gas (transaction) fees by up to 90%.

The Arbitrum network includes DeFi protocols like GMX, Uniswap, and Aave, along with growing NFT and gaming projects such as TreasureDAO and XAI Games. Thanks to the Arbitrum decentralized autonomous organization (DAO), developers benefit from strong documentation, grants, and ecosystem incentives.

Over time, this network has opened up to more developers via support for different programming languages. For example, the Nitro upgrade added support for Stylus, which allows Rust and C alongside Solidity.

2. OP Mainnet/Optimism

OP Mainnet is focused on simple, ethereum virtual machine (EVM)-equivalent scaling, as well as funding public goods through its RetroPGF program. This network currently holds about $3B in total value secured (TVS), and it uses fraud proofs to verify transactions during a short challenge period.

Fees typically stay below a few cents. Costs dropped even further after ETH’s Dencun upgrade in 2024 (EIP-4844), which reduced data storage costs for L2 networks.

Built on the OP Stack, Optimism serves as the foundational layer for other networks like Base. Optimism is central to the broader “Superchain” vision – a collection of interoperable L2s sharing the same technology.

3. Base

Built by Coinbase using the OP Stack, Base is an optimistic rollup designed to provide low-cost, developer-friendly scaling over ETH. It currently boasts about $12B in TVS. Base supports many dApps, benefiting from Coinbase’s wide reach and diverse set of integrations, and it also offers developer incentives through grants and tooling. 

Every transaction on Base includes an L2 execution fee and an L1 data posting fee. This structure is common across rollups, and allows Base to inherit ETH’s security while keeping costs low. Under normal conditions, simple transactions typically cost less than a cent.

4. zkSync Era

zkSync Era, developed by Matter Labs, is a zero-knowledge rollup that scales ETH while maintaining full EVM-like functionality. This network bundles thousands of transactions off-chain and posts validity proofs back to ETH, ensuring that every batch is cryptographically verified.

zkSync Era’s advantage is native account abstraction, which allows users to pay fees in any token and facilitates advanced smart contract wallets without extra layers. This feature, when combined with strong liquidity and growing DeFi adoption, has made zkSync Era one of the most widely used ZK rollups.

5. Starknet

Developed by StarkWare, Starknet uses STARK proofs, which are faster and more transparent alternatives to traditional zero-knowledge proofs. This quantum-proof network is built on the custom Cairo programming language, and it powers resource-intensive apps like Ekubo, Vesu, and Endur. These apps are too expensive to run on most other blockchains. 

Starknet currently secures about $225M in total value locked, and its adoption continues to grow. One key innovation driving that growth is the shared SHAP prover, which aggregates proofs from multiple dApps into a single submission. This approach lowers costs and increases throughput, making Starknet an attractive choice for developers building high-performance apps. And for added convenience, this platform’s dedicated currency Starknet (STRK) can be used to pay fees directly.

6. Mantle

Modular L2 network Mantle combines Optimistic Rollup execution with EigenDA. The latter is a system that stores transaction data off-chain to reduce costs. 

This network remains anchored to ETH for security, while offering much lower fees. Mantle is fully EVM-compatible, and it supports a growing set of DeFi and staking projects such as Agni Finance and Lendle. Its modular design helps it process transactions efficiently and cheaply, often for less than a cent.

7. Polygon

Polygon is often placed under the L2 umbrella, but it’s technically a proof of stake (PoS) sidechain that runs parallel to ETH. However, some initiatives connected to Polygon, such as Polygon zkEVM and Polymarket, are considered full L2 solutions. Plus, even as a sidechain, Polygon offers faster and cheaper transactions, and it’s compatible with ETH smart contracts and tools.

The Polygon blockchain also has a native token, POL (previously MATIC). This token is used for transaction fees and governance, and it supports a broad system of DeFi apps, NFT marketplaces, and Web3 games. While it doesn’t inherit ETH’s security directly like rollups do, Polygon remains one of the most widely adopted scaling solutions for Web3 apps.

Track your layer 2 transactions in a secure, centralized dashboard

Exploring new L2 networks offers an exciting glimpse into the future of blockchain and crypto. As technologies improve, even more efficient and secure solutions are sure to appear. Making the switch to L2 trading now is a great way to prepare for those advancements.

Navigating the crypto world can be challenging, but CoinTracker makes it easy! With automatic tracking of over 50,000 cryptocurrencies and integration with all of the top exchanges, we bring everything into one dashboard. Sign up for free and start your crypto journey with CoinTracker.

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.

FAQ

What are some layer 2 blockchains?

The list of layer 2 blockchains becomes longer each day. Some of the most popular networks include Arbitrum, Optimism, Base, zkSync Era, Starknet, and Mantle.

What are layer 2 coins?

Layer 2 coins are tokens used to govern or pay fees on networks that run on top of major blockchains like ETH or BTC. Examples include Arbitrum (ARB), Optimism (OP), Mantle (MNT), and Starknet (STRK).

Which layer 2 crypto is best for traders?

Layer 2s are networks, not cryptos, and which is best depends on your specific needs. Arbitrium, Optimism, and Base are good for general use and DeFi, while zkSync Era and Starknet are better for advanced zero-knowledge technology.

Is Solana a layer 1 or layer 2 blockchain?

Solana (SOL) is a layer 1 blockchain, like ETH and BTC, and it has its own base network and consensus system.