Layer 2 is a broad term for systems that extend Ethereum while using Ethereum for settlement or security. Rollups are the best-known approach: they execute many transactions separately and publish data or proofs back to Ethereum.
Optimistic and zero-knowledge rollups
Optimistic rollups assume submitted results are valid unless challenged through a fraud-proof process. Zero-knowledge rollups submit cryptographic validity proofs that Ethereum can verify.
Both approaches batch activity so the cost of an Ethereum transaction can be shared across many users. Their withdrawal times, proof systems, operators, and maturity differ.
Rollups share settlement across many transactions
A layer 2 can execute or bundle activity away from Ethereum’s main chain, then publish data or proofs used for settlement. Batching is a major source of cost savings.
Networks are not interchangeable
An address may look the same across Ethereum-compatible networks, but assets and applications exist in separate network states. A bridge or supported exchange route is normally needed to move value between them.
Before using a layer 2, review its bridge, upgrade controls, sequencer design, withdrawal route, and current stage of decentralization. Lower fees do not remove smart-contract or operational risk.
Moving between layers adds operational risk
Deposits, withdrawals, bridge contracts, sequencers, and challenge or proof systems can affect how quickly funds move and which assumptions a user accepts.
Sources
Educational information, not investment advice.