Discover Layer 2 Networks in 2024: 10 Breakthrough Projects Not to Be Missed

Since the creation of Bitcoin in 2008, blockchain technology has undergone profound transformations. Today, applications ranging from DeFi to NFT, metaverse, and Web3 are reshaping the digital financial landscape. However, as blockchain technology expands, scalability issues become increasingly urgent.

Leading Layer-1 blockchains like Ethereum and Bitcoin, while solid foundations, are limited by transaction throughput. Specifically, Bitcoin processes only about 7 transactions per second (TPS), Ethereum handles around 15 TPS, far below traditional systems like Visa with 1,700 TPS. This is precisely why Layer 2 solutions emerged—to address the blockchain trilemma: scalability, security, and decentralization.

What Is Layer 2? Scaling Solutions for the Future of Blockchain

Layer 2 is not a new concept, but 2024 has seen a surge in these protocols. Essentially, Layer 2 consists of auxiliary networks built on top of Layer-1 blockchains, enabling off-chain transaction processing to reduce network load.

Imagine Layer 2 as dedicated lanes on a highway—traffic flows more smoothly, fees are significantly reduced, and processing speeds increase dramatically. Instead of every transaction going through the main network, Layer 2 allows for batch processing off-chain, with summarized results posted on the main blockchain. This not only alleviates congestion but can cut gas fees by 90-95%.

How It Works: Off-Chain Processing and Efficiency

Layer 2 protocols operate based on the principle of off-chain transaction processing (off-chain). These transactions are handled separately and then summarized into a single transaction on the main chain. This approach offers three main benefits:

Increased Throughput for dApps and DeFi: Layer 2 transforms decentralized applications into fast, inexpensive, and widely accessible services.

Optimized User Profits: Lower transaction costs mean higher profits—crucial for yield farming and trading activities.

Encouraging Widespread Adoption: By making blockchain more user-friendly, Layer 2 paves the way for applications beyond finance, from gaming to supply chain management.

Layer 1, Layer 2, and Layer 3: The Layered Architecture of Blockchain

To understand better, we need to look at the vertical architecture of blockchain:

Layer 1 is the core platform—Bitcoin or Ethereum—where consensus, security, and smart contract execution occur. However, as transaction volume grows, Layer 1 becomes congested.

Layer 2 comprises secondary solutions, like bypass roads, redirecting transactions to side networks for faster processing at lower costs.

Layer 3 goes a step further, building specialized bridges on Layer 2 to provide advanced off-chain computation, seamless dApp interaction, and cross-chain communication.

Types of Layer 2 Protocols: Diverse and Flexible

Optimistic Rollups: Assumed Good Faith

Optimistic Rollups operate under the assumption that all transactions are valid unless proven otherwise. This straightforward yet effective approach is used by projects like Arbitrum (throughput 2,000-4,000 TPS, TVL $10.7 billion) and Optimism (throughput 2,000 TPS, TVL $5.5 billion).

Arbitrum currently holds over 51% of the Layer 2 market share on Ethereum, offering a developer-friendly environment with its native token ARB used for fees, staking, and governance.

Optimism is similarly strong, with its OP token serving similar functions. Both leverage Ethereum’s security while processing transactions off-chain.

Zero-Knowledge Rollups: Privacy King

ZK Rollups focus on privacy by aggregating transactions into a single proof that conceals personal details. This technology enables transaction validation without revealing sensitive information.

Polygon uses zkRollups, achieving impressive throughput of 65,000 TPS with TVL $4 billion. Its token MATIC is used for gas fees, staking, and governance.

Manta Network specializes in privacy, offering 4,000 TPS on Manta Pacific with TVL $951 million. It includes two modules: Manta Pacific for efficient transactions and Manta Atlantic for privacy-preserving identity management.

Coti initially was a Layer 2 for Cardano, now transitioning into a privacy-focused Layer 2 network for Ethereum, promising 100,000 TPS with TVL $28.98 million. Its COTI token is used for fees, staking, and governance.

Starknet employs STARK proofs (zero-knowledge proof), providing throughput of 2,000-4,000 TPS (theoretically up to millions of TPS) with TVL $164 million. It offers a developer-friendly environment via the Cairo language.

Plasma Chains: Specialized Sidechains

Plasma functions as satellite cities connected to the main network, each with its own infrastructure to handle specific tasks.

Validium: Balancing Security and Efficiency

Validium moves transactions off-chain for verification while ensuring security through cryptographic proofs. Immutable X (IMX) is dedicated to gaming, offering 9,000+ TPS with TVL $169 million, market cap $2.51 billion.

Notable Layer 2 Projects in 2024

1. Arbitrum - Market Leader

• Throughput: 2,000-4,000 TPS
• TVL: $10.7 billion
• Market Cap: $1.09 billion (ARB current $0.19)
• Technology: Optimistic Rollup

Arbitrum remains the dominant player with over 51% of Layer 2 market share. It processes transactions 10 times faster than Ethereum, reducing gas costs by 95%. Its ecosystem includes DeFi protocols, NFT marketplaces, and gaming platforms.

2. Optimism - Strong Competitor

• Throughput: 2,000 TPS (theoretically 4,000 TPS)
• TVL: $5.5 billion
• Market Cap: $513.24 million (OP current $0.26)
• Technology: Optimistic Rollup

Optimism offers Ethereum security without scalability issues. With 90% lower gas fees, it attracts DAOs, DeFi protocols, and major NFT marketplaces.

3. Lightning Network - Bitcoin Solution

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

Lightning Network enables faster, cheaper Bitcoin transactions. It allows instant microtransactions, ideal for daily use. However, it presents technical complexity challenges.

4. Polygon - Multi-Chain Ecosystem

• Throughput: 65,000 TPS
• TVL: $4 billion
• Market Cap: $7.5 billion+ (MATIC)
• Technology: zk Rollup

Polygon offers high throughput, ideal for DeFi and NFT marketplaces. It seamlessly connects with Ethereum and other chains.

5. Base - Coinbase’s Platform

• Throughput: 2,000 TPS
• TVL: $729 million
• Technology: Optimistic Rollup (OP Stack)

Supported by Coinbase, Base aims for near-instant transactions with 95% lower fees. It is developer-friendly and benefits from Coinbase’s large user base.

6. Dymension - Modular Ecosystem

• Throughput: 20,000 TPS
• TVL: 10.42 million DYM
• Technology: RollApps

Dymension is the first Layer-2 network in Cosmos, modularized to optimize performance. Developers can customize RollApps for specific needs.

7. Coti - Privacy First

• Throughput: 100,000 TPS
• TVL: $28.98 million
• Market Cap: $54.66 million (COTI current $0.02)
• Technology: zk Rollup

Coti transitioned from Cardano to Ethereum, focusing on privacy with secure garbled circuits.

( 8. Manta Network - Privacy Pioneer

• Throughput: 4,000 TPS
• TVL: )million
• Market Cap: $33.52 million ###MANTA current $0.07$951
• Technology: zk Rollup

Manta Network quickly gained prominence, surpassing Base to become the third-largest Layer-2 by TVL. It offers Universal Circuits for developers to create privacy-focused dApps.

( 9. Starknet - STARK Technology

• Throughput: 2,000-4,000 TPS
• TVL: )million
• Technology: zk Rollup ###STARK proofs$164

Starknet is committed to full decentralization, providing a developer-friendly environment. Its complex cryptography currently limits its user base size.

( 10. Immutable X - Gaming Specialty

• Throughput: 9,000+ TPS
• TVL: )million
• Market Cap: $192.28 million ###IMX current $0.23$169
• Technology: Validium

Immutable X is designed for gaming, offering fast transactions, true NFT ownership, and cross-game interoperability. It supports efficient creation, trading, and transfer of NFTs.

Ethereum 2.0 and the Future of Layer 2

Ethereum 2.0 does not render Layer 2 obsolete; instead, it fosters a symbiotic relationship. With Danksharding and Proto-Danksharding integration, Ethereum is expected to reach 100,000 TPS.

These advancements bring:

Enhanced Scalability: Danksharding optimizes Layer 2 efficiency, making them cost-effective.

Lower Transaction Fees: Proto-Danksharding reduces Layer 2 fees, opening access to everyone from seasoned traders to newcomers.

Seamless Synergy: Tight integration between Ethereum and Layer 2s ensures smooth user experiences.

Improved User Experience: Faster confirmations, less congestion, ultra-low gas fees—Ethereum 2.0 and Layer 2 together create an efficient, scalable blockchain.

Conclusion: The Year of Layer 2 in 2024

Layer 2 protocols are not just trends—they are a transformative shift. From Arbitrum and Optimism on Ethereum to Lightning Network for Bitcoin, these networks are shaping the future of cryptocurrency.

Layer 2 solutions do more than improve transaction speed or reduce fees—they unlock new possibilities for DeFi, gaming, NFTs, and Web3. By solving the blockchain trilemma, they demonstrate that blockchain technology can be fast, cost-effective, and truly decentralized.

2024 is the year of Layer 2, and the future of blockchain is being built on these networks.

Learn More:

• Top Ethereum Layer 2 projects to watch in 2024
• TOP 6 prominent Bitcoin Layer 2 projects in 2024
• What is ZK Rollup? The 10 best ZK Rollup projects on Ethereum in 2024
• Blockchain Layer 1 and Layer 2 scaling solutions
• Comparing differences between Blockchain Layer 2 and Layer 3