Layer Two

An explainer in layers

Layer Two

Scaling, one layer at a time.

Start with a bar tab. End with a rollup. This is a patient, hands-on guide to how Bitcoin-style systems can carry more everyday payments without asking the base chain to do all the work itself.

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The depth gauge on the edge of the screen shows how far down the explanation goes. L0 is the analogy, L1 the mechanics, L2 the fine print. Every page is written in that order.

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Step 1 of 4: settle once

Settle once, on the base chain

You and a friend lock some funds into a shared script on the base chain. That is one public transaction. It is slow and careful on purpose, because every full node checks it.

L0 · Analogy

Start with a bar tab.

You and a bartender could pay for every drink the moment it lands on the counter. Or you could keep a running tab, and settle once at the end of the night.

The tab is not a different kind of money. It is a promise that both of you can check, backed by the fact that the till is right there. Neither of you needs to call a notary for every round. You only call the notary if somebody walks out, or the tab is disputed.

Now map it. The notary is the base chain: slow, public, careful, and very hard to cheat. The tab is a layer two: fast and private between the people who share it, and anchored to the notary so that nobody has to take anybody's word for it.

That is the whole idea. The rest of this site is about how the tab is kept honest.

Why not put every payment on the base chain?

Because the base chain is built to be dependable, not fast. Three design choices make it that way.

Everyone checks everything

Anyone can run a full node and verify the rules for themselves. That is the point of the system, and it only stays practical if the amount of work each node must do stays modest.

Blocks are deliberately limited

New blocks arrive roughly every ten minutes on average, and each one has a ceiling on how much it can hold. Space is scarce by design, so it gets used for things that need its guarantees.

Settlement should be boring

The base layer is where disputes end. Its rules change rarely and carefully, which is exactly why you would rather not experiment on it. Experiments belong on top.

L1 · Mechanics

Three ways to stack a layer.

Each one moves activity off the base chain. Each one pays for that in a different currency. None of them is free, which is why there is a whole page for comparing them.

Payment channel: two peers joined by a line, anchored to the base chain below

Payment channels

Analogy: the bar tab, exactly. Two people keep a running balance and settle once.

Mechanics: both lock funds in a shared output that needs both signatures. They then swap signed updates that re-split the funds, and only the opening and closing touch the chain.

Try one in the simulator
Sidechain: a separate parallel track joined to the base chain by a two-way bridge

Sidechains

Analogy: a second railway line with its own timetable, joined to the main station by a staffed transfer desk.

Mechanics: a separate chain with its own rules and block production. A bridge moves value across, and who controls that bridge largely sets how much trust you are extending.

See where it sits
Rollup: many small transactions bundled into one compact record posted to the base chain

Rollups

Analogy: a courier who collects a hundred parcels, then lodges one sealed receipt with the registry.

Mechanics: transactions run elsewhere, but compact data or a proof about the result is posted to the base chain, so the base layer can be the final referee.

Read the concept

Commit, move, settle.

Almost every layer two follows the same three-beat rhythm, whatever it is made of.

  1. One transaction written onto the base chain plane

    Commit

    Lock value into rules that the base chain can enforce. This is the slow, public step, and it only happens once per relationship.

  2. Many small packets moving across the upper plane

    Move

    Transact as often as you like on the upper layer. Updates are quick and cheap because fewer parties have to agree on each one.

  3. One closing transaction written back onto the base chain plane

    Settle

    Write the final outcome back to the base chain. If anyone misbehaves along the way, the commitment from step one is what lets the others recover.

L2 · Fine print

What layering does not do.

  • It does not speed up the base chain. It lets fewer things need the base chain at all.
  • It does not erase tradeoffs. Channels ask for locked funds and attention. Sidechains ask for trust in a bridge. Rollups ask for more machinery. You choose what you pay.
  • It does not make every design equal. Different layers rest on different assumptions, and a few of the ideas here are still being debated or built. Where this site is unsure, it says so.
  • It does not replace judgment. This is an explainer, not advice. The numbers inside the tools are editable examples, never claims about the real world.

Layer Two is an independent educational project. It is not affiliated with, endorsed by, or paid by any company, wallet, exchange or protocol.

Simulator

Open a channel, send payments both ways and watch off-chain updates pile up while on-chain transactions stay at one.

Open the simulator →

Tradeoff explorer

Set your own weights for trust, throughput, liquidity and complexity, and watch the radar reshape.

Compare the designs →

Concepts and glossary

The longer read: analogies, mechanics, risks, a self-check and a searchable glossary.

Start reading →