Layer 2

Definition

Layer 2s (optimistic or ZK rollups and related designs) aim for cheaper, faster transactions while inheriting security from a base chain. Economics depend on sequencers, bridges, and fee share — which vary widely by design.

L2 research starts with trust assumptions: who sequences, how withdrawals work, and what happens if a bridge or prover fails. “Inherits Ethereum security” is a spectrum, not a binary slogan.

Liquidity fragments across L2s. A vibrant app ecosystem with thin bridges and scattered DEX depth can still be hard to enter or exit at size. Treat fragmentation as a first-class risk.

Token utility differs wildly — gas, governance, sequencer revenue share, or points-to-airdrop speculation. Read the design before applying an L1-style valuation template. Translate yield into expected tokens over your real holding window.

Why researchers care

• Bridge and sequencer assumptions are core risks.
• Liquidity can fragment across L2s.
• Token utility varies widely — read the design.
• Fee share to token holders is often aspirational until live.

How to use it in research

• Map withdrawal delay and bridge custody model before treating TVL as “safe.”
• Compare sequencer decentralization roadmaps across two rollups in the same cohort.
• Discount usage driven purely by points programs ahead of a TGE.

Common mistakes

• Assuming all L2 tokens capture sequencer fees today.
• Ignoring bridge risk because the base chain is reputable.
• Using L1 comps without adjusting for stage and capture.