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Layer 2

Intermediate

Layer 2 refers to secondary frameworks or protocols built on top of Layer 1 blockchains, such as Ethereum, to improve speed and reduce transaction costs. These solutions handle transactions off-chain and report back to the main chain, helping ease network congestion. Layer 2s enhance the speed and efficiency of blockchain networks while maintaining the main chain’s security. Examples include Arbitrum, Optimism, and Polygon. Layer 2s are essential for scaling decentralised applications (dApps) and expanding the adoption of decentralised finance (DeFi).

Related Words

Liquidity Pool

Intermediate

A liquidity pool is a collection of digital assets locked in a smart contract to facilitate decentralised trading. Users earn a share of trading fees by contributing their tokens, powering systems like Uniswap and Curve.

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Trading in Virtual Assets involves significant risk, including the potential loss of your entire capital. None of our communications are intended to provide investment, legal, or financial advice, nor to induce you to trade in such instruments. You should assess your risk tolerance and seek independent expert financial advice before trading. You must ensure that your use of BitDelta’s services complies with all applicable laws and regulations, as further detailed in our Terms and Conditions. Please carefully review our Terms and Conditions, Risk Disclosure Statements, and Security and Privacy Policies to understand the risks involved and the limitations on our liability before using our services.​
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