Layer 1 vs. Layer 2 Networks
Last reviewed: August 2026
"Layer" sounds like a minor technical detail, so why does it change how much a transaction costs and how fast it settles? It helps to picture a highway with tollbooths that get busier during rush hour, versus a shuttle van that groups several passengers together before merging onto that same highway. Layer 1 is the highway itself: the base network where every transaction competes directly for limited space. Layer 2 is the shuttle: it handles activity off to the side while still relying on Layer 1 for security and settlement. Batching passengers before merging back onto the highway, like the shuttle does, is the most common way Layer 2 networks do this today, though not the only way.
Layer 1 vs. Layer 2 Networks
| Dimension | Layer 1 | Layer 2 |
|---|---|---|
| Where Activity Happens | Directly on the underlying network itself. | Off the base network, which still backs its security and settlement. |
| Fees | Rise and fall with demand: through direct bidding, a protocol-adjusted formula, or both, depending on the network. | Lower and steadier: handling activity off the base network, commonly by batching, spreads costs across many transactions at once. |
| Settlement | Final on confirmation: the actual settled state, not a preview of it. | Delayed: that activity still has to settle back on Layer 1 before it's truly final. |
The distinction is about where finality actually happens: Layer 1 is where a transaction is finally settled, and Layer 2 simply defers a batch of activity until it reaches that point. See Network Monitor for how activity across a network gets tracked.