Layer 2: The Quiet Revolution of Ethereum

If Ethereum is a congested highway, Layer 2 are the fast lanes that reduce congestion. Layer 2 technology has become one of the fastest growing areas of blockchain in 2025.

What is Layer 2?

Layer 2 is a protocol that runs “above” Ethereum (Layer 1), performs transactions outside it, and submits grouped updates to the main network. This enables high speed and low fees while utilizing Ethereum security.

Optimistic Rollups

Arbitrum and Optimism are the big optimistic rollups. They assume transactions are valid and allow for an appeal period. Arbitrum has grown into the largest DeFi network in terms of TVL in 2024-2025. Coinbase’s base is built on Optimism and is very popular.

ZK Rollups: The Next Generation

ZK Rollups like zkSync, StarkNet and Polygon zkEVM use Zero-Knowledge Proofs to verify transactions. They are ultimately faster but more complex to develop. In 2025, ZK Rollups occupy an increasing share.

The effect on commissions

After the Dencun upgrade in 2024, Layer 2 fees dropped to seconds and even tenths of a cent. This opened up new possibilities for microtransactions, games and apps that were uneconomical in Layer 1. Read about the Pectra upgrade.

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