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Layer-2Ethereum
The Layer 2 Renaissance: Scaling Blockchain for Mass Adoption
Beginner
2025-11-20 | 10m
The blockchain trilemma that's balancing scalability, security, and decentralization has long challenged the crypto industry. As Ethereum’s mainnet struggles with congestion and high fees during market peaks, Layer 2 (L2) solutions have emerged as critical scaling infrastructures. These protocols, built atop Layer 1 blockchains like Ethereum, process transactions off-chain while leveraging the security of the underlying chain. Recent developments, including Ethereum’s Interoperability Layer (EIL) proposal and escalating competition between Optimistic and ZK-
Rollups
, have propelled L2s into the spotlight. With the total value locked (TVL) in L2 ecosystems surpassing $50 billion and major projects like Arbitrum and Base leading adoption, this article explores the technology, key projects, recent advancements, controversies, and future trajectory of Layer 2 networks.
What Are Layer 2 Solutions?
Layer 2 refers to secondary protocols built on existing blockchains (Layer 1) to enhance scalability and efficiency without compromising security. By moving computation off-chain and submitting only final proofs or batched transactions to the main chain, L2s significantly reduce transaction costs and increase throughput. For example, while
Ethereum’s base layer handles 15-30 transactions per second (TPS), L2s like StarkNet achieve over 3,000 TPS.
Layer 2 implementations vary in their technical approaches, each with distinct advantages:
Optimistic Rollups: Assume transactions are valid by default and only run computation via fraud proofs when challenged. This approach offers significant fee reduction and high EVM compatibility.
ZK-Rollups (Zero-Knowledge Rollups): Utilize cryptographic validity proofs to verify transaction batches, offering enhanced privacy, security, and immediate finality.
State Channels: Enable participants to conduct direct off-chain transactions through encrypted channels, minimizing on-chain interactions.
Sidechains: Semi-independent blockchains with their own consensus mechanisms that connect to the main chain.
Validiums: Use zero-knowledge proofs but store data outside the main blockchain, offering a middle ground between sidechains and rollups.
Other approaches include state channels (e.g., Lightning Network) and sidechains, though Rollups have gained dominance due to their security guarantees.
Major Layer 2 Projects and Ecosystems
The Layer 2 landscape has evolved into a vibrant, competitive ecosystem with several standout projects leading the way in adoption and innovation.
Ethereum Layer 2 Leaders
Arbitrum (ARB): The dominant Optimistic Rollup solution by total value locked, Arbitrum provides EVM compatibility for a seamless developer experience, significantly lower fees compared to Ethereum mainnet, and the Nitro technology that boosts throughput. Its ecosystem boasts over 300 deployed dApps.
Optimism (OP): A pioneer in Optimistic Rollup technology, Optimism introduced the OP Stack—a modular, open-source development framework powering its "Superchain" vision of connecting multiple L2 chains. It features a robust security model with a 7-day withdrawal period and strong governance through the Optimism Collective.
Polygon
zkEVM: This zero-knowledge solution offers full EVM equivalence (not just compatibility), leveraging ZK proofs for enhanced security and faster finality while maintaining Ethereum's security.
zkSync
Era: A leading ZK-Rollup implementation featuring native account abstraction, ultra-scaling through zkPorter technology, and EVM compatibility through a specialized zkEVM architecture.
StarkNet (STRK): Utilizing STARK proofs for validation, StarkNet achieves higher transaction throughput than other ZK solutions, employs the Cairo programming language for optimized performance, and enables recursive proving for enhanced scaling.
Base: Developed by Coinbase based on the OP Stack, Base stands out through its deep integration with L1 Ethereum infrastructure, developer-friendly environment with familiar tools, and strong ecosystem growth with major DeFi protocols.
Bitcoin Layer 2 Innovations
The Bitcoin ecosystem has also seen a surge in Layer 2 development, particularly following the popularity of Ordinals and BRC-20 tokens in 2023. Key projects include:
Lightning Network: Originally proposed in 2015 and fully implemented by 2018, Lightning uses state channels with Revocable Sequence Maturity Contracts (RSMC) and Hashed Timelock Contracts (HTLC) to enable fast, low-cost Bitcoin payments. A significant July 2023 update added support for Taproot assets, potentially bringing stablecoins to the Bitcoin ecosystem.
Stacks: Operating since 2017 (originally as Blockstack), Stacks uses the Transfer Proof (PoX) consensus mechanism, where miners stake Bitcoin to secure the Stacks blockchain and earn rewards. Its August 2024 Nakamoto upgrade increased block production speed by 120x, reducing confirmation times from 10 minutes to seconds.
Rootstock (RSK): First proposed in 2015, Rootstock has developed a comprehensive RIF ecosystem (RSK Infrastructure Framework) encompassing DEX, wallets, domain services, and various dApps. The team is now focusing on BitVMX technology and RBTC super-applications.
Merlin Chain: Launched in February 2024, this Bitcoin L2 integrates ZK-Rollup technology with a decentralized oracle and on-chain BTC fraud prevention module. It has achieved remarkable growth with $12 billion in TVL and 190 million on-chain addresses
Recent Technological and Ecosystem Developments
The Layer 2 ecosystem continues to evolve at a rapid pace, with several significant developments shaping its trajectory.
Technical Innovations and Upgrades
Recent months have seen substantial technical advancements across major L2 platforms. Optimism successfully reimplemented its "Cannon" fault-proof system in September 2024, returning to Stage 1 status after briefly reverting to Stage 0 due to a bug discovery.
StarkNet has rolled out its V3 upgrade with support for parallel transactions, pushing TPS beyond 10,000. Meanwhile, zkSync has introduced "one-click chain launch" tools, resulting in a 30% monthly increase in ecosystem sub-chains.
Ethereum's co-founder Vitalik Buterin has been particularly vocal about decentralization milestones. In September 2024, he issued a clear ultimatum to Layer 2 projects: achieve "Stage 1" status by year-end or no longer be considered true Layer 2 networks. This declaration highlights the ongoing tension between rapid innovation and the foundational blockchain principles of decentralization and security.
According to L2Beat research, six Ethereum Layer 2 networks have reached Buterin's Stage 1 threshold: Arbitrum One, Optimism, dYdX v3, ZKsync Lite, DeGate v1, and Fuel v1. However, several prominent networks including Base, Blast, ZKsync Era, and Starknet remain in Stage 0, though some are close to achieving Stage 1 status.
Security and Decentralization Concerns
The push toward greater decentralization has been accelerated by security incidents that exposed the risks of centralized components. In June 2024, the Velocore decentralized finance protocol suffered a $2.6 million exploit on the Linea network. In response, the
Linea team took the controversial step of halting block production to prevent the attacker from bridging funds to
Ethereum. This action sparked criticism across the community, as a truly decentralized Layer 2 should not be capable of being unilaterally stopped by its development team.
These incidents have brought increased scrutiny to what constitutes a "true" Layer 2. The fundamental question is whether a network depends on Ethereum for its security and can therefore be trusted to protect user funds, or whether it operates as an essentially independent network with potentially different security assumptions.
Controversies and Security Challenges
Despite rapid growth, L2s face scrutiny over centralization risks and security models. Solana co-founder Anatoly Yakovenko criticized L2s for relying on multi-signature upgrades, which allow developers to unilaterally alter bridge contracts and access user funds. This contradicts claims of “inheriting Ethereum’s security.” Additionally, projects like Blast and
ZkSync Era remain in “Stage 0” of decentralization, meaning they can theoretically censor transactions or halt block production.
The Velocore hack on Linea in June 2025 exemplified these vulnerabilities. The team paused block production to mitigate $2.6 million in losses, a move impossible on Ethereum mainnet. Vitalik Buterin subsequently urged L2s to achieve “Stage 1” decentralization, implementing fraud proofs and decentralized sequencers by the end of 2025. As of November 2025, only six networks (including
Arbitrum and
Optimism) meet this standard.
Layer 2 Market Performance and Trends
As Layer 2 solutions mature, they face several significant challenges and controversies that could shape their future development.
The Decentralization Debate
The most pressing controversy revolves around the decentralization status of various L2 networks. Vitalik Buterin's Stage classification system has become a critical benchmark in this discussion. A Stage 1 rollup includes both fraud proof or validity proof schemes in its network smart contracts that prevent developers from publishing invalid state roots. Additionally, network upgrades must have a delay of at least seven days to implement unless approved by a security council.
Many networks that claim to be Layer 2s remain stuck at Stage 0 or below, leading to criticism that the entire Ethereum ecosystem has failed to deliver on its promises. This has created confusion among users about which networks truly inherit Ethereum's security guarantees and which operate with different trust assumptions.
Security Incidents and Response
The Velocore exploit on Linea and the subsequent network halt highlighted the ongoing centralization risks in many L2 solutions. Critics argued that if a network's security truly depended on Ethereum, such a stoppage shouldn't be possible. After all, authorities can't simply pause Ethereum itself. This incident prompted many to claim that Ethereum's ecosystem was decentralizing too slowly, putting user funds at risk despite the branding of these networks as secure Layer 2 solutions.
Technical Implementation Hurdles
Different technical approaches continue to face their own unique challenges. Optimistic Rollups, while offering excellent EVM compatibility and simpler development, require a 7-day challenge period for withdrawals. ZK-Rollups, despite their superior security and immediate finality, remain more complex to develop and face hurdles in achieving full EVM compatibility. Projects like StarkNet with their custom Cairo programming language have faced steeper learning curves for developers accustomed to Solidity.
Future Outlook and Challenges
The trajectory of Layer 2 solutions points toward continued growth, innovation, and potentially profound structural changes in how blockchain ecosystems operate.
Technological Convergence and Interoperability
Perhaps the most promising development on the horizon is the proposed Ethereum Interoperability Layer (EIL), disclosed by the Ethereum Foundation in November 2024. This ambitious initiative aims to make all Layer 2 networks feel like a single, unified Ethereum chain from a user perspective, enabling cross-L2 transactions that feel as simple as single-chain transactions while preserving minimal trust and decentralization.
The EIL functions as a secure communication protocol rather than a financial instrument, built on the foundation of ERC-4337 account abstraction. Its design philosophy enables users to sign just once to complete cross-chain transactions without introducing new trust assumptions. If successful, this could solve the pervasive user experience fragmentation that currently plagues the multi-chain ecosystem.
Bitcoin Layer 2 Expansion
The Bitcoin Layer 2 ecosystem is poised for significant growth, particularly in expanding Bitcoin's functionality beyond simple payments and value storage. Projects like Bitcoin Hyper are building innovative L2 solutions with Solana Virtual Machine (SVM) integration, bringing high-speed smart contracts to Bitcoin's secure base layer. This development could fundamentally change how we view Bitcoin's potential, enabling DeFi, NFTs, and gaming applications built on Bitcoin's unparalleled security.
Institutional Adoption and Real-World Applications
As Layer 2 solutions mature, they're increasingly attracting institutional interest. According to ZKsync developers, institutions are exploring blockchain settlement, though progress remains challenging without system-level privacy. The dramatically lower transaction costs and improved throughput of L2 networks make blockchain technology increasingly viable for enterprise applications that would be cost-prohibitive on Layer 1.
The growth of specialized L2 solutions like Linea, which offers full EVM equivalence with zero-knowledge security optimized for institutional needs, indicates a market responding to enterprise requirements for both performance and compliance.
Conclusion
Layer 2 networks have evolved from experimental scaling solutions to foundational blockchain infrastructure. By enabling low-cost transactions and fostering innovation in AI, gaming, and DeFi, they address critical bottlenecks in Web3 adoption. However, challenges around security, interoperability, and decentralization remain. The proposed Ethereum Interoperability Layer promises a seamless multi-chain future, while ZK-Rollups’ advances in privacy and performance could redefine blockchain scalability. As the industry moves toward integrated networks rather than isolated ecosystems, L2s will play a pivotal role in blockchain’s journey toward mass adoption.
References:
Weiss, Y., & Account & Chain Abstraction Team. (2025, November 18).
Making Ethereum feel like one chain again. Ethereum Blog.
https://blog.ethereum.org/2025/11/18/eil
Ethereum. (2025, August 25).
Validium.
Ethereum.org.
https://ethereum.org/zh/developers/docs/scaling/validium/
Cointelegraph. (2025, November 14).
Layer2 news. Retrieved November 20, 2025, from
https://tw.cointelegraph.com/tags/layer2
CoinCatch Team
Disclaimer:
Digital asset prices carry high market risk and price volatility. You should carefully consider your investment experience, financial situation, investment objectives, and risk tolerance. CoinCatch is not responsible for any losses that may occur. This article should not be considered financial advice.
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