What are Layer 2 altcoins? A quick guide for those learning about L2s and why they matter in crypto 👇 Layer 1 (L1) blockchains: - These are the base networks like Bitcoin, Ethereum, Solana, Avalanche. - They handle their own security and consensus. - L1s process transactions directly on their chain (on-chain). Examples: Bitcoin, Ethereum, Solana. Layer 2 (L2) solutions: - These are built on top of L1s (mainly Ethereum right now). - They inherit the security of the L1 but handle transactions off-chain or in batches. - This reduces fees, increases speed, and scales the L1. Think of L2s as fast “express lanes” built on top of Ethereum. --- Key difference: - L1 = foundation chain with its own consensus - L2 = scaling layer that uses L1 security but processes transactions off-chain or in rollups. --- Why Layer 2 altcoins matter: L2 tokens represent the governance, fees, and utility of the L2 ecosystem. They can capture value as more users move to L2s. Example: @arbitrum $ARB - Arbitrum is the largest L2 by activity. - It uses optimistic rollups to scale Ethereum. - It offers cheaper and faster transactions with Ethereum security. - $ARB token is used for governance. --- Another example: Polygon (POL) - Polygon started as a sidechain but now offers L2 solutions (Polygon zkEVM). - Polygon is building multiple scaling layers for Ethereum. - POL is used for fees and staking in the Polygon ecosystem. --- As Ethereum adoption grows, Layer 2 scaling becomes critical. Layer 2 altcoins like @arbitrum and POL and others can benefit as more activity moves to L2s. If you want to understand where crypto is heading, L2s are one of the most important narratives to follow right now. DYOR.