What is Layer 2?
The short answer
A network built on top of a layer 1 blockchain to make transactions faster and cheaper.
Layer 2 networks process transactions more efficiently, then settle back to the underlying layer 1 chain for final security — a way to scale without changing the base network itself.
Related terms
Full glossaryCustodial Wallet
A wallet where a company (like an exchange) holds your keys for you.
Proof of Work
A consensus method (used by Bitcoin) where network security comes from competing computing power.
Market Cap
A coin's price multiplied by how many coins exist — a rough measure of overall size.
Exchange
A platform where you can buy, sell, and trade cryptocurrencies, usually for traditional currency.
DCA (Dollar-Cost Averaging)
Buying a fixed amount on a regular schedule, regardless of price, instead of trying to time the market.
Staking
Locking up crypto to help secure a proof-of-stake network, in exchange for rewards.
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