Best Layer 2 Crypto Networks

Best Layer 2 Networks

After reviewing more than 25 Ethereum Virtual Machine (EVM)-compatible and non-EVM chains, we have identified the top five layer 2 networks. These networks excel in security, validator distribution, application support, user experience, scalability, and fees. They leverage advanced technologies like optimistic and zk-rollups for efficient transaction bundling, as well as state channels and plasma for off-chain transactions. These features make them leaders in onchain scaling and performance.

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1. Base

Base, built by Coinbase, has overtaken the crown as the top Ethereum Layer 2 in 2024, pulling in over 1.12 million daily active addresses and seeing a 544% surge in transaction count. Fees are rock-bottom at $0.002 per transaction, paired with a throughput of 10.01 Mgas/s, making Base ideal for handling massive on-chain activity.

Since achieving Stage 1 Decentralization in mid-2024, Base is on track to slash costs further with the Ethereum Pectra upgrade. With $3.40 billion in stablecoins locked and $95K in daily profits, it’s already a revenue powerhouse. Backed by Coinbase’s institutional network, including potential giants like BlackRock, Base is primed to bring millions into the crypto space.

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2. Arbitrum

Arbitrum remains a leader in DeFi with $14.28B in Total Value Locked, powering major projects like GMX and Radiant Capital. The Orbit framework pushes the limits by allowing developers to build Layer 3 chains, expanding beyond the traditional Layer 2 scope. Arbitrum has 508,000 daily active addresses and handles 1.78 million daily transactions.

It also ranks just below Ethereum in daily DEX volume, cementing its spot in decentralized trading. The Nitro stack boosts throughput and cuts transaction costs, keeping Arbitrum competitive. The ARB token maintains a solid $2.1 billion market cap, being overshined only by Polygon's POL (previously MATIC) token.

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3. Optimism

Optimism is central to Ethereum scaling, using the OP Stack to build modular and interoperable Layer 2 chains. With $6.28 billion in Total Value Locked and 705,000 daily transactions, Optimism maintains strong activity and user growth. Its Superchain initiative aims to connect multiple Layer 2s, allowing seamless liquidity and asset flow between chains.

The network’s governance, powered by the OP token, directs resources toward public goods, ensuring the ecosystem’s growth. With a $2.01 billion market cap, up 99% in the past year, Optimism continues to gain influence. While it may not match Arbitrum's liquidity, Optimism’s focus on development and governance makes it a top Ethereum Layer 2 player.

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4. Stacks

Stacks extends Bitcoin’s utility beyond payments by introducing smart contracts and sBTC (synthetic BTC) through its Nakamoto Upgrade, which is set to go live in October 2024, enabling faster blocks and Bitcoin finality. By enabling Clarity smart contracts, Stacks allows Bitcoin to support Web3 applications.

While the Lightning Network leads in payments, Stacks is extending Bitcoin to a programmable platform for broader use cases, including decentralized applications. Currently, the STX token has a market cap of approximately $3 billion, making it the 32nd largest crypto asset. In terms of TVL, Stacks holds $109 million, compared to $320 million for the Lightning Network.

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5. Eclipse

Eclipse, set to launch its public mainnet in October 2024, is a hybrid Layer 2 blockchain that uses Solana’s Virtual Machine (SVM) for high-speed execution while relying on Ethereum for settlement. By integrating Celestia for data availability, Eclipse boosts scalability without sacrificing decentralization and offers smooth cross-chain integrations.

Unlike standard single-threaded rollups, Eclipse utilizes a parallel execution model, inherited from Solana, to increase throughput by processing transactions simultaneously and maintaining localized fee markets for greater efficiency. Several Solana-native projects, including Mango and Orca, have already committed to migrating to Eclipse, recognizing its performance and flexibility.

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What is an Ethereum Layer 2?

Ethereum Layer 2 (L2) networks were initially designed to address the blockchain trilemma of security, scalability, and decentralization; a feat many "Ethereum Killers" Layer 1s failed to achieve. For scalability, L2s employ a variety of technologies, such as:

• Optimistic Rollups: These solutions assume transactions are valid unless proven otherwise with fraud proofs. Examples: Optimism, Arbitrum, Base, Taiko, Mode Network.
• ZK Rollups: These use zero-knowledge proofs to verify transactions without needing to reveal sensitive data. Examples: ZKsync, Scroll, Starknet, Linea, Polygon zkEVM.

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What is a Bitcoin Layer 2?

Bitcoin Layer 2s, theoretically can help scale the network, enabling faster and cheaper transactions while preserving Bitcoin's security. Beyond payments, they expand Bitcoin’s functionality to include programmability and dApps. Key examples include:

• Lightning Network: Optimized for micropayments, Lightning allows instant, low-cost Bitcoin transactions by settling off-chain and batching transactions back to the Bitcoin main chain.
• Stacks: Introduces smart contracts and decentralized finance on Bitcoin, making it possible to build dApps and engage in DeFi on the Bitcoin network.
• BOB: Focuses on enhancing transaction efficiency, offering a lighter, more flexible L2 for building Bitcoin applications.
• Merlin Chain: A Bitcoin Layer 2 that offers EVM (Ethereum Virtual Machine) compatibility.

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What is a Solana Layer 2?

While Solana is already popular for its high throughput, congestions from NFT drops and heavy meme coin trading activity has driven demand for scaling methods like Layer 2s and appchains. Solana's monolithic structure offers impressive speed, but developers are increasingly exploring modular approaches like rollups to handle specific workloads.

This tech would allow for increased transaction throughput and lower fees by reducing competition for blockspace on the mainnet. Solana's architecture, with sub-400ms block times, offers ideal conditions for rollups to thrive, and there’s growing interest in dedicated blockspace for specific applications like DeFi, crypto gaming, and governance.

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Bottom Line

Layer 2 networks are essential for scaling blockchains like Ethereum, Bitcoin, and Solana, as they lower transaction fees, improve speed, and enable decentralized applications to grow. Base leads the way on Ethereum, followed by Arbitrum and Optimism.

In the meantime, Stacks brings smart contracts to Bitcoin, expanding its use cases beyond payments, while Solana developers explore appchains and rollups to manage growing demand for blockspace and reduce network congestion with protocols like Eclipse.