Layer 2 solutions are built on top of Layer 1 blockchains to improve scalability, reduce fees, and increase transaction throughput while inheriting the security of the base layer.
Types of Layer 2 solutions include Rollups (Optimistic and ZK), State channels, Plasma chains, and Validiums.
Popular Layer 2 solutions: Arbitrum and Optimism (Ethereum), Lightning Network (Bitcoin), Polygon (Ethereum sidechain), and zkSync and StarkNet (ZK rollups).
Benefits of Layer 2: Faster transactions, lower fees, inherits L1 security, and enables new use cases like micropayments.