How it works
They aim to increase throughput or reduce fees while preserving a connection to the underlying chain. The exact security model differs significantly between designs.
What to check
Check how data is published, how withdrawals work, who can upgrade the system and whether a sequencer or operator can censor transactions.
- Check withdrawal mechanism
- Identify sequencer control
- Review upgrade keys
Limits and risks
A Layer 2 inherits only some properties from its base chain. Bridges, upgrade keys and centralized sequencers can introduce additional trust assumptions.
Primary sources
Bitcoin Developer Reference↗Ethereum developer documentation↗FATF: Virtual Assets↗General information only. Investment products can lose value, and terms, fees and regulation can change.