10 Notable Layer 2 Projects: Next-Generation Blockchain Scaling Solutions

Blockchain technology has undergone profound development since Bitcoin’s launch in 2008. Today, decentralized applications such as DeFi, GameFi, NFTs, and the metaverse are experiencing explosive growth, but they all face a major challenge: scalability. While Bitcoin processes about 7 transactions per second (TPS) and Ethereum Layer-1 handles around 15 TPS, traditional systems like Visa can process up to 1,700 TPS. To address this issue, layer 2 technology has emerged as a key solution, enabling existing blockchains to process transactions faster, cheaper, and with greater scalability.

Exploring the Nature of Layer 2 Technology

Layer 2 solutions operate by redirecting transactions away from the main blockchain (Layer-1) to optimized auxiliary networks. If you think of Layer-1 blockchain as a main highway, then Layer 2 is like dedicated lanes built alongside, allowing traffic to flow smoothly without congestion.

Layer 2 mechanisms are based on off-chain transaction processing principles. Instead of recording every transaction on the main blockchain, Layer 2 aggregates thousands of transactions, processes them separately, and then submits a single consolidated transaction back to the main chain. This approach significantly reduces congestion, cuts gas fees by 90-95%, and increases throughput, making DeFi and NFT applications more accessible.

Key Advantages of Layer 2 Networks

Enhanced Economic Efficiency: Low transaction fees make activities like yield farming, token trading, or NFT buying and selling truly profitable rather than being eaten up by high fees.

Practical Application Expansion: Faster and cheaper transactions mean blockchain can extend beyond finance into supply chain management, gaming, and other industries.

Security Backed by Layer-1: All Layer 2 transactions are anchored to Ethereum or Bitcoin, so the fundamental security features are preserved.

Widely Used Types of Layer 2 Technologies

Optimistic Rollups: “Assuming the Best”

This method operates on the principle that all transactions are valid unless proven otherwise. It simplifies verification and conserves computational resources.

Advantages: Fast, low-cost, highly compatible with Ethereum.
Disadvantages: Challenge periods can be lengthy.

Projects using Optimistic Rollups include Arbitrum, Optimism, and Base.

Zero-Knowledge Rollups: “Proving Without Revealing”

This technology uses cryptographic proofs to verify transaction validity without revealing personal details. It’s like a magician proving a card disappeared into their sleeve without opening the sleeve.

Advantages: Safer, faster confirmation, better privacy.
Disadvantages: Computationally intensive, high development costs.

Projects utilizing ZK Rollups include Manta Network, Starknet, and Coti.

Plasma Chains: “Specialized Sidechains”

These are subordinate blockchains connected to the main Ethereum chain, operating independently but still secured by the main network’s security.

Validium: “Balancing Security and Speed”

Validium combines the benefits of ZK Rollups with higher scalability, ideal for applications requiring extremely high processing speeds.

Projects using Validium include Immutable X.

Top 10 Notable Layer 2 Projects

1. Arbitrum – Market Leader

• Technology: Optimistic Rollup
• Throughput: 2,000–4,000 TPS
• Current Price (ARB): $0.10
• 24h Change: +4.48%
• Circulating Market Cap: $583.44M

Arbitrum accounts for over 51% of Ethereum’s Layer 2 market share. It processes transactions up to 10 times faster than Ethereum mainnet, reducing gas fees by up to 95%. It offers a developer-friendly environment with a dense ecosystem of DeFi projects, NFT marketplaces, and gaming platforms.

The ARB token is used for transaction fees, staking, and governance. With a strong development team, Arbitrum continues to expand and improve, positioning itself as a market leader.

2. Optimism – Competitor on Equal Footing

• Technology: Optimistic Rollup
• Throughput: 2,000 TPS
• Current Price (OP): $0.13
• 24h Change: +2.08%
• Circulating Market Cap: $278.50M

Also based on Optimistic Rollups, Optimism processes transactions up to 26 times faster than Ethereum mainnet with 90% lower gas fees. The project boasts a self-governing community and a broad ecosystem including DeFi, NFT marketplaces, and DAOs.

The OP token functions similarly to ARB. Optimism continues to refine its technology and expand its ecosystem, solidifying its position as a leading Layer 2 solution.

3. Lightning Network – Unique Bitcoin Solution

• Technology: Bi-directional Payment Channels
• Throughput: Up to 1 million TPS
• Current Price (BTC): $67,880
• 24h Change: +0.04%
• Circulating Market Cap: $1.36T

Lightning Network enables faster, cheaper, and more accessible Bitcoin transactions. Operating off-chain, it allows instant microtransactions with minimal fees, leveraging Bitcoin’s core security.

It offers near-instant transaction confirmation, ideal for daily use. However, it faces technical complexity and limited adoption compared to the main network.

4. Polygon – Multi-Chain Ecosystem with Strong Growth

• Technology: ZK Rollup + Proof-of-Stake Sidechain
• Throughput: 65,000 TPS
• Current Price: Referenced from historical data
• TVL: $4 billion

Polygon is a multi-chain ecosystem offering various Layer 2 solutions. With throughput surpassing Ethereum mainnet, it seamlessly connects with Ethereum and other chains like BNB Chain.

The MATIC token is used for gas fees, staking, and governance. Polygon is popular in DeFi and NFT communities, with major marketplaces like OpenSea and Rarible integrating its solutions.

5. Base – Coinbase’s Layer 2 Network

• Technology: Optimistic Rollup (OP Stack)
• Throughput: 2,000 TPS
• TVL: $729 million

Built by Coinbase, Base aims to enhance Ethereum’s capabilities. Using OP Stack and Optimistic Rollups, it targets near-instant transactions with 2,000 TPS.

It reduces Ethereum gas costs by up to 95%, making it attractive for DeFi and NFTs. Backed by Coinbase, it benefits from security and a large user base. It’s developer-friendly, offering familiar tools.

6. Dymension – Modular Blockchain Ecosystem

• Technology: RollApps (Deeply Integrated Rollups)
• Throughput: 20,000 TPS
• Current Price (DYM): $0.04
• 24h Change: -0.28%
• Circulating Market Cap: $19.84M

Dymension is the first Layer 2 network within the Cosmos ecosystem. It allows developers to customize RollApps for specific needs, choosing consensus mechanisms, smart contract platforms, and data solutions.

Its modular design enables scaling of individual RollApps without affecting the entire network. DYM tokens are used for fees, governance, and staking. Still in development, its modularity may be complex for newcomers.

7. Coti – Privacy-Focused Layer 2

• Technology: ZK Rollup
• Throughput: 100,000 TPS
• Current Price (COTI): $0.01
• 24h Change: +2.50%
• Circulating Market Cap: $32.85M

Coti is transitioning into a privacy-centric Layer 2 network for Ethereum. It aims to provide fast, low-cost transactions with security and interoperability.

Using cryptographic security and garbled circuits, Coti ensures transaction privacy. Its integration with Ethereum and other chains broadens its reach. COTI tokens are used for fees, staking, and governance.

8. Manta Network – Privacy Priority

• Technology: ZK Rollup
• Throughput: 4,000 TPS
• Current Price (MANTA): $0.07
• 24h Change: +1.58%
• Circulating Market Cap: $33.98M

Manta Network focuses on privacy for Ethereum, enabling anonymous transactions and secure smart contracts. It includes Manta Pacific (EVM-compatible Layer-2) and Manta Atlantic (privacy-preserving identity management).

Zero-knowledge cryptography underpins Manta, ensuring validity without revealing private data. It offers Universal Circuits to help developers create privacy-focused DeFi apps.

Since its launch, Manta has rapidly gained prominence, becoming Ethereum’s third-largest Layer 2 by TVL.

9. Starknet – Power of STARK Proofs

• Technology: ZK Rollup (STARK Proofs)
• Throughput: 2,000–4,000 TPS (theoretically up to millions)
• TVL: $164 million

Starknet uses STARK proofs, a type of zero-knowledge proof, to verify off-chain transactions. It offers unmatched speed with theoretical throughput reaching millions of transactions per second.

Transaction fees are significantly reduced, making daily blockchain interactions nearly free. Starknet aims to be a fully decentralized network governed by the community. Its cryptographic complexity may be challenging for newcomers, resulting in a smaller user base compared to other Layer 2s.

10. Immutable X – Focused on Gaming

• Technology: Validium
• Throughput: 9,000+ TPS
• Current Price (IMX): $0.17
• 24h Change: +4.20%
• Circulating Market Cap: $142.56M

Immutable X is a Layer 2 dedicated to gaming, providing scalable, cost-effective, and secure infrastructure to enhance Web3 gaming experiences.

Using ZK-Rollups, it achieves over 4,000 TPS with near-instant transactions and minimal fees. IMX tokens power the network, used for fees, staking, and governance.

Immutable X promises smooth experiences for gamers with fast transactions and true NFT ownership. Developers benefit from low costs, user-friendly tools, and a growing gaming ecosystem.

The Future of Layer 2 as Ethereum 2.0 Develops

Ethereum 2.0 is a transformative upgrade aimed at increasing speed, efficiency, and scalability. The next phase is expected to incorporate Danksharding, especially Proto-Danksharding, boosting Ethereum’s throughput to 100,000 TPS.

This advancement will significantly impact Layer 2 networks:

Efficiency Optimization: Danksharding will enhance Layer 2’s effectiveness, making them ideal for cost-efficient operations. The network will be able to handle massive data loads.

Lower Transaction Fees: Proto-Danksharding will reduce Layer 2 transaction costs, opening opportunities for both experienced DeFi traders and newcomers.

Seamless Integration: Ethereum 2.0 will improve support for rollup and sequencer Layer 2 solutions, enabling smoother interoperability and communication.

Enhanced User Experience: Faster confirmations, less network congestion, and ultra-low gas fees—these are the potentials Danksharding offers.

Conclusion: Layer 2 Is Not Just a Temporary Fix

Layer 2 solutions are not merely temporary technologies but foundational shifts in blockchain development. They address the scalability challenges faced by Layer-1 blockchains, enabling faster, cheaper, and more accessible transactions.

From booming Ethereum Layer 2 projects to innovative Bitcoin scaling solutions, these networks are shaping the future of the crypto industry. They pave the way for widespread adoption, unlock new opportunities, and demonstrate that blockchain can be truly fast, affordable, and accessible.

With Ethereum 2.0’s progress and continuous improvements in Layer 2, the future of blockchain will be a harmonious ecosystem combining the security of Layer-1 with the efficiency of Layer-2—where Layer 2 not only complements but elevates the entire blockchain system.