Ethereum suffers from a very good problem to have: it’s popular. 

But with so many people using it and many applications being built upon it, users pay the price, literally. High network congestion drives up transaction costs and makes it difficult for the network to scale.

That’s where layer-2 blockchains come in. 

A layer–2 blockchain is a protocol built atop a layer-1 blockchain such as Ethereum. They borrow the L1’s security attributes and help reduce congestion (and fees) by ferrying transactions off the mainnet in bulk. After executing the transactions, L2s submit a compressed version of their blocks back to the mainnet.

Thus, L2 scaling solutions offer the security of Ethereum with fees that shouldn’t burn through your savings. They’re ideal for most regular users, who are overpaying for security they don’t practically need; L2s are less expensive and almost as secure as Ethereum. Here is how you can start using the L2 ecosystem.

Step 1: Choose an L2 for You

The L2s operating on Ethereum today differ in how they commit to Ethereum. Users can make the most of L2s by understanding their benefits and associated tradeoffs:

  • ZK rollups: Zero-knowledge (ZK) rollups scale Ethereum by processing transactions off-chain and submitting a lightweight validity proof (calculated off-chain) on the Ethereum chain to finalize the transaction batch. Instead of a trash compactor, it’s a transaction compactor that frees up space on the network. One benefit of ZK rollups is that transactions finalize almost instantly. But users pay the price for this (though fees are still lower than they’d typically be on Ethereum). Two popular scaling solutions, StarkNet and Loopring, use ZK-STARKs and ZK-SNARKs, respectively. Polygon is also working on a ZK-based scaling solution called zkEVM.
  • Optimistic rollups: Optimistic rollups work similarly to ZK rollups by batching transactions and executing them on the L2 instead of on Ethereum. However, to keep fees low, they assume transactions are valid unless someone proves otherwise. Other users can submit fraud proofs during a challenge period that lasts around a week. The downside is that transactions don’t become final until the challenge period ends, so users must wait to move their funds directly from the rollup back to Ethereum. Arbitrum and Optimism are two popular optimistic rollups on Ethereum.

In addition to L2s, there’s one other type of scaling solution worth knowing about:

  • Sidechains: Sidechains are not technically L2s because they do not inherit Ethereum’s security. Instead, they operate with separate validators and consensus processes but connect to the Ethereum chain via a two-way bridge. While very scalable, their bespoke security setups may leave them vulnerable to centralization. Polygon PoS is a popular sidechain.

Selecting a specific scaling design can be overwhelming. In addition to factors such as throughput and fees, users must also consider ease of use and their comfort level with security. Bridging across all L2s follows similar steps, but we have used Arbitrum One to illustrate the steps below.

Step 2: Set Up Your Ethereum Wallet

Before you can start using an L2, you must first set up your Ethereum wallet. MetaMask is the most popular online wallet for the Ethereum ecosystem, but you may also use others, such as WalletConnect. (The steps below will use MetaMask.)

If you haven’t already, install MetaMask on your preferred device and create a wallet by setting a password and securely copying the seed phrase. You now have an Ethereum account! 

Next, head into your MetaMask settings and add your destination network.

Note that when you add another L2 network, Metamask will do so under the same public address. Add sufficient ETH into your Ethereum wallet to cover the desired amount and gas, which is the unit of transaction fees on the Ethereum network. The gas cost rises as traffic on the Ethereum network increases, and is known to cost anywhere between a few dollars and a few hundred dollars. Because the gas is unaffected by the value of the tokens you transfer, we’d advise transferring all the funds you expect to use on the L2 in one go. It’s the difference between paying a transaction fee just once or a similarly sized fee every time you transfer.

Step 3: Start Bridging

You have two general choices for bridging. You can use the official gateway (in this case, Arbitrum) or select a third-party bridge such as Multichain or Celer. (Third-party bridges sometimes offer competitive fees and broader network options.) Gas fluctuates frequently, so double-check gas charges before submitting the transaction to ensure you pay the expected amount. If gas gets too high, you can either wait for it to cool down or pay the premium. Once final, the transaction becomes immutable.

An Arbitrum transaction sample

Arbitrum vs. Ethereum fee comparison

Step 4: Verify the Transaction on Etherscan

Etherscan is a blockchain explorer. Since the genesis block, it has stored all publicly available information like gas, block time, and transaction hash for all Ethereum transactions. To make sure your transaction went to the L2, enter the address. 

Etherscan sample

Step 5: Use the L2

Layer–2 networks are brimming with activity these days. From DeFi to the metaverse, nearly every mainstream application on Ethereum is compatible with leading L2s such as Arbitrum and Optimism. Trade tokens on Uniswap, buy NFTs on OpenSea, or do whatever you would otherwise use Ethereum for — only with cheaper transactions.

Dapps on Arbitrum | Source: DefiLlama

Pro tip: If you like to try out new or experimental applications, keep in mind that they could be malicious or untested. Minimize the risk of losing your funds by spreading them across multiple addresses. 

You can manage multiple addresses on MetaMask

Step 6: Head Back to Ethereum

Moving funds back to Ethereum is optional. Some users secure their L2 earnings by sending them to Ethereum, while others never return. If you do choose to bridge back to Ethereum, follow the same steps as before, this time with the L2 as the sender chain.

Conclusion

Layer-2 scaling solutions can be nearly as secure as Ethereum at a fraction of the cost. Users can make the most of L2s by finding a rollup design that suits their needs.

L2s are so crucial to the Ethereum ecosystem that an entire phase of the Ethereum improvement roadmap is dedicated to making them more efficient and economical. Dubbed “the Surge,” this next phase will boost the utility of L2s by enabling transactions to become final in under a second.