Stablecoin Infrastructure Glossary
Layer 2 Scaling
Layer 2 scaling refers to protocols built on top of a base blockchain that process or aggregate transactions with less direct Layer 1 work while relying on the base chain for specified security, settlement, data, or dispute functions.
Explanation
Layer 2 designs include payment channels, rollups, and other off-chain or partially on-chain protocols. They can reduce fees or increase throughput by executing activity away from the base chain and posting compressed data, proofs, commitments, or dispute information back to Layer 1. The degree of reliance on Layer 1 varies by architecture, so Layer 2 should not be treated as one uniform security model.
Why it matters
Layer 2 networks can materially lower the cost of stablecoin payments while adding new assumptions around sequencers, bridges, proofs, data availability, and withdrawals.
Example
A rollup can execute many stablecoin transfers off the base execution layer and publish compressed transaction data or proofs to Layer 1.
Related terms
Last reviewed: September 2026