A Beginner's Guide to Bitcoin Layer 2
Bitcoin Layer 2 processes transactions or computation outside the main chain in an effort to increase throughput, lower the cost of small payments, and add capabilities such as smart contracts. Different solutions use different security models and technical trade-offs.
Why Layer 2 Is Needed
Bitcoin's base layer prioritizes decentralization and security, but produces blocks slowly and has limited processing capacity, which may cause confirmation delays and higher fees during busy periods. Layer 2 moves some transactions or computation outside the main chain and submits only the necessary results back to the Bitcoin network, reducing the burden on the main chain.
Three Common Mechanisms
A state channel lets participants transact continuously off-chain and records balances on-chain only when the channel opens and closes. A sidechain has independent consensus rules and connects to Bitcoin through a cross-chain mechanism. A rollup compresses or packages multiple transactions and then submits a result or proof to the main chain.
Different Solutions Address Different Problems
The lightning network focuses on fast, low-cost small payments. Rootstock, Stacks, and BOB focus on programmability and smart contracts. Liquid targets faster settlement and asset issuance. Babylon explores using Bitcoin to provide economic security for proof-of-stake networks.
Understand the Risks before Use
Layer 2 does not mean completely replicating the security of Bitcoin's main chain. Different protocols may depend on cross-chain bridges, independent consensus, smart contracts, or additional trust assumptions. In addition to speed, cost, and functionality, users should understand asset-custody methods, failure handling, and settlement mechanisms.
Original Tutorial
https://www.binance.com/zh-CN/academy/articles/what-are-bitcoin-layer-2-networks
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