Layer-2 Blockchain: 10 Scaling Protocols Shaping the Future in 2024

When Bitcoin (BTC) introduced decentralized payments in 2008, few predicted that this technology would develop into a platform for hundreds of diverse applications. Today, from DeFi to GameFi, NFTs, metaverse, and Web3, blockchain has become the fundamental infrastructure for the digital world. But there is a major issue: scalability.

Ethereum and Bitcoin, the largest Layer-1 platforms, are stuck with performance bottlenecks. Bitcoin processes only 7 transactions per second (TPS), Ethereum around 15 TPS, while Visa can handle 1,700 TPS. This gap is why Layer-2 is no longer an optional choice—it is the future.

What Is Layer-2 Solution and Why Is It Important?

Imagine auxiliary roads built parallel to a congested highway. That’s how Layer-2 works. Instead of all transactions occurring directly on the main blockchain (Layer-1), these Layer-2 protocols handle a batch of off-chain transactions, then aggregate and send them to the main network.

The result? Transactions are faster by 10-100 times, fees are reduced by 90-95%, and throughput skyrockets. This is the successful formula that leading Layer-2 networks are applying to solve the blockchain trilemma—balancing scalability, security, and decentralization.

The Three Tiers of Blockchain: From Core Infrastructure to Specialized Technologies

Layer-1: The Core Foundation

Layer-1 is the main blockchain—Bitcoin, Ethereum. They ensure security through consensus mechanisms and smart contract execution. But as traffic increases, they become congested, leading to slow transactions and high fees.

Layer-2: The Express Lanes

Layer-2 addresses congestion by redirecting transactions to side networks. The result is significantly faster speeds, lower fees, and higher scalability—all anchored to the security of Layer-1.

Layer-3: Specialized Solutions

Layer-3 builds on Layer-2, offering features optimized for specific applications—advanced off-chain computation, seamless dApp interactions, or cross-chain communication.

Four Types of Layer-2 Technologies You Need to Know

Optimistic Rollups: Trust-Based Approach

Optimistic Rollups assume all transactions are valid unless proven otherwise. This simplifies verification processes and reduces costs. They are the most popular solution on Ethereum L2 today, combining efficient computation with robust security.

Zero-Knowledge Rollups (zk Rollups): Privacy Champions

zk Rollups bundle transactions into a single cryptographic proof, hiding personal details while ensuring validity. They excel in DeFi and NFT applications where privacy and speed are crucial.

Plasma Chains: Independent Sidechains

Plasma chains operate as satellite cities connected to the main Ethereum. Each has its own infrastructure to handle specific tasks, offering fast speeds and low fees.

Validium: Balancing Security and Speed

Validium processes transactions off-chain and verifies them via cryptographic proofs, achieving high scalability without sacrificing security. Ideal for applications prioritizing throughput.

Top 10 Layer-2 Networks Leading the Market in 2024

1. Arbitrum: Market Leader

Throughput: 4,000 TPS
TVL: $10.7 billion
Market Cap: $1.08 billion (ARB)
Technology: Optimistic Rollup

Arbitrum is not just a Layer-2 network; it’s a dominant force. Holding over 51% of Ethereum’s L2 market share as of January 2024, it has become the top choice for developers. Why? Because it offers transactions 10 times faster than Ethereum mainnet, with fees reduced by 95%.

Its ecosystem is rapidly expanding—from leading DeFi protocols to NFT marketplaces and gaming platforms. The ARB token powers the network, used for fees, staking, and governance.

While Arbitrum faces inherent risks common to new Layer-2 solutions (dependent on Layer-1 security), its strong development team and vibrant community continually push boundaries, proving it’s more than just a temporary trend.

2. Optimism: The Close Competitor

Throughput: 4,000 TPS
TVL: $5.5 billion
Market Cap: $512.27 million (OP)
Technology: Optimistic Rollup

Optimism offers Ethereum’s security without scalability issues. With 4,000 TPS, it processes transactions 26 times faster than Ethereum mainnet, with fees reduced by 90%.

It is a self-governing community with a growing ecosystem of DeFi protocols, NFT marketplaces, and DAOs. Its developer-friendly environment and collaborative community create a strong presence in Layer-2 space.

The OP token plays roles in governance, staking, and transaction fees. Despite similar inherent risks as other L2s, Optimism demonstrates its commitment to decentralization and ongoing innovation.

3. Lightning Network: Bitcoin’s Revolution

Throughput: Up to 1 million TPS
TVL: $198 million+
Technology: Bi-directional payment channels, smart contracts

Lightning Network is the future of fast, cheap, accessible Bitcoin transactions. Operating off-chain, it enables instant microtransactions with minimal fees, leveraging Bitcoin’s core security.

Transactions are confirmed almost instantly, making it ideal for daily use. Fees are significantly lower, and scalability issues are fully addressed.

Challenges? Technical complexity for newcomers and limited adoption compared to mainnet. But as Lightning matures, it will unlock a whole new world for Bitcoin applications.

4. Polygon: Multi-Dimensional Ecosystem

Throughput: 65,000 TPS
TVL: $4 billion
Market Cap: $33.53 million (MANTA)
Technology: zk Rollup

Polygon isn’t just a network—it’s an ecosystem. Offering multiple Layer-2 solutions to scale Ethereum, it enables faster transactions and lower gas fees.

With 65,000 TPS, Polygon far exceeds Ethereum mainnet. Its ultra-low fees make it ideal for DeFi, NFT marketplaces, and frequent blockchain interactions. Seamless integration with Ethereum and other chains like BNB Chain adds flexibility.

Polygon’s ecosystem includes top DeFi protocols like Aave, SushiSwap, Curve, and major NFT marketplaces like OpenSea. The MATIC token fuels all activities.

5. Base: Coinbase’s Vision for Layer-2

Throughput: 2,000 TPS
TVL: $729 million
Technology: Optimistic Rollup

Coinbase’s Base is a new Layer-2 protocol with big ambitions. Using OP Stack and Optimistic Rollups, it aims for 2,000 TPS with near-instant transactions.

It reduces Ethereum gas fees by up to 95%, making DeFi and NFTs more affordable. Backed by Coinbase, Base benefits from security expertise and a vast user base.

Still in development, Base has the potential to become a crucial bridge between today’s Ethereum and its scalable future.

6. Dymension: Modular Rollups of Cosmos

Throughput: 20,000 TPS
TVL: 10.42 million DYM
Market Cap: $30 million (DYM)
Technology: RollApps

Dymension is a modular blockchain ecosystem with specialized RollApps—custom blockchains built on a secure payment hub. As Cosmos’s first Layer-2 network, it separates consensus, execution, and data availability.

Using deeply integrated rollups (enshrined rollups), it embeds permanent validity into Dymension Hub, enhancing trust. Supports cross-chain interactions via Inter-Blockchain Communication (IBC).

Developers can customize RollApps for specific needs. Its modular design allows scaling individual RollApps without affecting the entire network. The DYM token is used for fees, governance, and staking.

7. Coti: From Cardano to Ethereum

Throughput: 100,000 TPS
TVL: $28.98 million
Market Cap: $54.56 million (COTI)
Technology: zk Rollup

Initially a Layer-2 solution for Cardano, Coti is transitioning into a privacy-focused Layer-2 network for Ethereum. This shift aims to provide faster, cheaper transactions with Ethereum’s security and privacy.

COTI tokens are used for transaction fees, staking, governance, and commerce processing. EVM-compatible architecture and strong cryptography ensure transaction data security.

Coti’s adaptability opens opportunities for developers familiar with Ethereum tools to build privacy-centric dApps.

8. Manta Network: Privacy as Priority

Throughput: 4,000 TPS
TVL: $951 million
Market Cap: $33.53 million (MANTA)
Technology: zk Rollup

Manta Network is an Ethereum privacy-focused ecosystem offering anonymous transactions and secure smart contracts. It includes Manta Pacific (EVM-compatible Layer-2) and Manta Atlantic (privacy identity management).

Zero-knowledge cryptography is central, ensuring transaction validity without revealing privacy details. Universal Circuits enable developers to easily create privacy-focused dApps.

Manta promises high scalability (4,000 TPS), developer-friendly environment (EVM-compatible), and strong Ethereum integration. Rapidly gaining popularity, it surpasses Base to become Ethereum’s third-largest Layer-2 by TVL in January 2024.

9. Starknet: STARK Proofs for Ultimate Speed

Throughput: 2,000-4,000 TPS (theoretically up to millions)
TVL: $164 million###
Technology: zk Rollup

Starknet uses STARK proofs to verify off-chain transactions, delivering unmatched speed. Theoretical throughput can reach millions of TPS, with near-zero transaction fees.

It offers a developer-friendly environment with the Cairo programming language, committed to becoming a fully decentralized network. Its ecosystem is rapidly growing with innovative DeFi, NFT, and gaming dApps.

The cryptographic nature of Starknet can be complex for newcomers, and its user base is relatively small compared to older L2s. But ongoing progress indicates a bright future.

$169 10. Immutable X: Gaming-Focused Layer-2

Throughput: 9,000 TPS+
TVL: (million)
Market Cap: $2.51 billion IMX
Technology: Validium

Immutable X is a dedicated Layer-2 network for gaming, offering scalability, affordability, and security. It leverages ZK-Rollups to achieve over 4,000 TPS with near-instant transactions and minimal fees.

IMX tokens power the network, used for fees, staking, and governance. It promises a seamless experience for gamers—fast transactions, true NFT ownership, and cross-game interactions.

Developers benefit from low costs, easy-to-use tools, and a thriving gaming ecosystem. With high throughput, IMX supports efficient creation, trading, and transfer of NFTs.

How Ethereum 2.0 Will Transform Layer-2

Ethereum 2.0 is not an enemy of Layer-2—it’s an ally. Proto-Danksharding, part of the upcoming upgrade, will boost Ethereum’s throughput to an impressive 100,000 TPS.

What does this mean for Layer-2?

• Scalability Unleashed: Layer-2 will become more efficient, further reducing transaction fees, making DeFi and blockchain apps more accessible to everyone.

• Smoother Integration: Proto-Danksharding enhances Ethereum’s support for Layer-2 rollups, enabling tighter communication and seamless user experience.

• Better User Experience: Faster confirmations, less network congestion, ultra-low gas fees—that’s the future of Ethereum and Layer-2 working together.

This complementary relationship is key to the future needs of dApps and DeFi.

Looking Ahead: Layer-2 as the Foundation of Blockchain’s Future

Layer-2 protocols have proven that blockchains can be both fast and cost-effective. They are solving the blockchain trilemma—balancing scalability, security, and decentralization.

2024 is the year of Layer-2. From booming Ethereum solutions to innovative Bitcoin networks, they are shaping the future of crypto. They are paving the way for widespread adoption, unlocking new opportunities, and demonstrating that blockchain is not just fast and cheap—it’s for everyone.

If you want to understand the future of blockchain, you need to understand Layer-2.