What is a layer 2? How crypto networks get faster and cheaper
By SendPay Business · · 2 min read
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- 3It lands in their account
A layer 2 is a network built on top of a main blockchain (the layer 1) to handle transactions more quickly and cheaply. It does most of the work off the main chain, then settles the results back onto it.
Why they exist
Main blockchains such as Bitcoin and Ethereum can only fit a limited number of transactions into each block. When demand is high, fees rise and payments slow down. Layer 2s take pressure off the main chain.
Well-known examples
- Lightning Network: payment channels for fast, low-cost bitcoin payments.
- Rollups on Ethereum, such as Arbitrum, Optimism and Base: they bundle many transactions into one and post it to Ethereum.
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The trade-offs
Moving coins between a layer 2 and the main chain often uses a bridge, which adds risk. Some rollups also make you wait around a week to withdraw back to the main chain. And not every exchange or wallet supports every layer 2, so sending coins on the wrong network can mean losing them.
Where SendPay fits
SendPay platforms let your customers buy, sell and hold crypto under your own brand, with assets held with regulated partners.
How it works
Your own money app- 1Name it and pick your colours
- 2Choose what it does
- 3Launch when you are ready
Why sign up
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Questions people ask
What would a Lightning payment cost?
Work out routing fees hop by hop and compare with sending on-chain.
Lightning Network fee calculator →What does an Ethereum transaction cost?
Work out a gas fee in ETH and in your currency.
Gas fee calculator →Read next
Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.