Layer 2 is a blockchain technology that processes transactions outside of a blockchain's main network (layer 1) to make transactions faster and cheaper. Layer 2 solutions bundle many transactions together and periodically settle them on the main blockchain. They reduce congestion and fees while maintaining the security of the main network.
Ethereum's main network is slow and expensive during busy times, with high gas fees. A layer 2 solution like Arbitrum allows you to transact much faster and cheaper by processing your transactions off the main Ethereum network. Periodically, these transactions are bundled and recorded on Ethereum's main network, ensuring security while keeping costs low.
Greater Fool is a free Chrome extension that explains terms like this in place. Highlight a word on any page, click Explain, keep reading.
Add to Chrome (free)