L2: rollups where fees are cents
Lesson 13 of 58 in the course “Crypto”. Free, with animations and a quiz.
Why L2s exist
An L2 (Layer 2) is a network on top of an L1, usually Ethereum. It processes transfers on its own and sends a compressed summary to Ethereum. Think bus instead of taxi: hundreds of passengers share one ride, so the ticket is cheap. Security still leans on Ethereum: the L2’s data is recorded there, and anyone can check it. The best-known L2s are Arbitrum, Base, Optimism and zkSync. Gas on them is paid in ETH.
Why it got so cheap
L2s used to write their summaries into Ethereum as regular data, which was expensive. On 13 March 2024 the Dencun upgrade shipped EIP-4844: Ethereum got blobs, a separate cheap space for L2 data that is kept for about 18 days. L2 fees dropped many times over, and a normal transfer now costs cents or even fractions of a cent. That is why it makes sense for a beginner to start DeFi on an L2, not on Ethereum mainnet.
Optimistic and ZK
Rollups come in two kinds. Optimistic ones (Arbitrum, Optimism, Base) assume every transfer is honest by default. If someone spots a fraud, they have about 7 days to challenge it. That is why withdrawing from such a network to Ethereum through the official bridge takes about a week. ZK rollups (zkSync, Starknet, Linea, Scroll) attach a mathematical proof to every batch that everything was calculated correctly. They do not have to wait for challenges, so withdrawals go faster. For a regular user, the difference shows up mostly in withdrawal speed.
Not all L2s are equally safe
The L2BEAT site rates L2s by stages. Stage 0: the team can change almost anything, so you are basically trusting people. Stage 1: there are safety mechanisms, but a security council can still step in. Stage 2: the rules are locked into code. The second thing is the sequencer, which puts transfers in order. On most L2s there is just one, run by the team. Base, for example, is developed by Coinbase. If the sequencer glitches, the network slows down. Before moving a large amount into a new L2, take a look at l2beat.com.
Does bitcoin have an L2?
Yes, the best known is the Lightning Network. Two parties open a payment channel with one Bitcoin record, then send as many instant payments inside it as they like, even a couple of cents each, and when they close it the final balance is written to Bitcoin again. Apps such as Strike and Wallet of Satoshi work this way, and in El Salvador people pay in cafés over Lightning. The downsides: it is more complex, and for large sums a regular transfer on Bitcoin itself is safer.
Check yourself
- Why should a beginner start DeFi on an L2 rather than Ethereum mainnet?
Correct answer: Fees are many times lower and security leans on Ethereum. Mistakes there cost cents, not tens of dollars. But you still need ETH for gas, and protocol risks have not gone anywhere. - You withdraw ETH from Arbitrum to Ethereum through the official bridge. Why does it take about a week?
Correct answer: An optimistic rollup has a challenge window. For about 7 days anyone can prove a fraud. Want it faster? Third-party bridges, covered in a later lesson. - A new network shows Stage 0 on L2BEAT. What does that mean for you?
Correct answer: The team can change a lot, so be careful with large sums. Stage 0 is the earliest level: in effect you trust the team. It is not a verdict, but a reason not to bring everything there.