A Layer 2 blockchain, often called an L2, is a network built on top of a Layer 1 blockchain like Ethereum. Layer 2 networks are designed to make Ethereum faster and cheaper by processing transactions off the main chain while still relying on Ethereum for security.
Layer 2 networks bundle many transactions together and submit them back to Ethereum as a single update. This reduces congestion on Ethereum and lowers transaction fees, while keeping activity verifiable on the main network.
Common Layer 2 approaches include Optimistic Rollups, Zero-knowledge (ZK) Rollups, and state channels.