What is a layer 2 blockchain token

A layer 2 framework or protocol is one that is added on top of an existing blockchain system. These protocols' main objective is to address the scale and transaction speed issues that are plaguing the major cryptocurrency networks.
For instance, it is still difficult for Bitcoin and Ethereum to handle thousands of transactions per second (TPS), which is undoubtedly harmful to their long-term development. Before these networks can be efficiently embraced and used on a larger scale, more throughput is necessary.

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The different methods that being proposed to address the blockchain scalability issue are referred to as "layer 2". The Ethereum Plasma and the Bitcoin Lightning Network are two prominent examples of layer 2 solutions. Both ideas aim to give blockchain systems a higher throughput despite having unique functioning mechanisms and characteristics.

State channels, which are essentially associated channels that carry out blockchain activities and report them to the main chain, are the foundation upon which the Lightning Network is built. The primary purpose of state channels is as payment channels. The Plasma framework, on the other hand, is made up of side chains, which are effectively little blockchains arranged in a tree-like layout.

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In a larger sense, layer 2 protocols establish a second foundation for blockchain operations, allowing them to operate separately from layer 1 operations (main chain). This makes these methods also known as "off-chain" scaling solutions.
The main chain does not need to undergo any structural changes as a result of the second layer being added as an extra layer, which is one of the key benefits of employing off-chain solutions. Therefore, layer 2 solutions may be able to deliver large throughput without compromising network security.

Therefore, a significant amount of the work that would normally be done by the main chain can be transferred to the second layer. As a result, the second layer enables fast throughput and may process hundreds or even thousands of transactions per second, while the main chain (layer 1) guarantees security.

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