Layer 2 protocols exist because Layer 1 blockchains face a throughput ceiling. Ethereum processes roughly 15-30 transactions per second on its base layer. During periods of high demand, gas fees spike to $50 or more per transaction, pricing out most users. Layer 2 networks solve this by executing transactions off the main chain and posting compressed proofs or data back to L1.
The two dominant L2 architectures are optimistic rollups and zero-knowledge (ZK) rollups. Arbitrum and Optimism are optimistic rollups: they bundle hundreds of transactions into single batches, assume all are valid, and rely on a challenge period where anyone can submit a fraud proof if they detect a bad transaction. This approach offers strong EVM compatibility, making it straightforward for existing Ethereum dApps to deploy on these networks.
ZK rollups take a mathematically rigorous approach. Protocols like Loopring and Immutable X generate cryptographic proofs that verify entire transaction batches without revealing individual details. The tradeoff is computational overhead on the prover side, but the result is faster finality and stronger security guarantees.
Polygon has evolved from a simple sidechain into a multi-pronged scaling platform, building its own ZK-EVM alongside its existing proof-of-stake chain. Mantle, backed by BitDAO's treasury, uses a modular architecture that separates execution, data availability, and settlement into distinct layers.
Stacks brings smart contract functionality to Bitcoin. Rather than scaling Ethereum, it anchors to Bitcoin's proof-of-work security through its Proof of Transfer consensus, opening up DeFi, NFTs, and programmability for BTC holders. Cartesi takes yet another approach, letting developers write rollup logic in familiar languages like Python and C++ through a Linux-based virtual machine.