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What Is Layer 2 in Blockchain?

Author: Content Editor
The content discusses Layer 2 solutions in the field of cryptocurrency. Layer 2 refers to off-chain networks or technologies that are built on top of a base blockchain (Layer 1). These solutions aim to improve scalability and transaction throughput while maintaining decentralization and security. By handling transactions more efficiently, Layer 2 solutions reduce congestion and lower transaction costs on the main chain. They operate independently from the main chain and can process a high volume of transactions off-chain, allowing the main chain to focus on security. Layer 2 solutions consist of a network for transaction processing and a smart contract on the base blockchain to resolve disputes and confirm the state of the Layer 2. They periodically send cryptographic proofs to the main blockchain to verify transaction integrity. Ethereum co-founder Vitalik Buterin emphasizes the security and efficiency of Layer 2 networks on Ethereum, highlighting successful projects like Farcaster, Lens, and Polymarket. He suggests that a balanced fee structure is crucial for Ethereum's future, ensuring accessible fees for both Layer 1 and Layer 2 transactions.

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