Truly decentralized blockchains attract participation that provides worldwide transparency and reinforces why they were developed in the first place. But blockchain networks also have a problem: As the number of network users increases, so do network congestion and transaction costs. This is where Layer 2 protocols come in.

In their simplest forms, Layer 2s leave transaction execution and activities on the base layer blockchain while handling most other activities off the chain. This, in turn, eases congestion and lowers costs. This Javelin Strategy & Research report delves into Layer 2s, the blockchain issues they can alleviate, and the challenges associated with implementing them.

Key questions discussed in this report:

• What are the challenges facing blockchain networks? 
• What are Layer 2s? 
• What are the risks associated with Layer 2s when they’re incorporated into traditional business models? 
   

Companies Mentioned:

Bitcoin Visuals, Block, Defillama, FedWire, L2Beat, L2fees, Microstrategy, NCR Corporation, OpenNode, Twitter