Scaling Ethereum: Why These 10 Layer-2 Projects Are Dominating 2025

The blockchain scalability challenge is real. Bitcoin processes roughly 7 transactions per second, Ethereum manages around 15 TPS, yet Visa handles approximately 1,700 TPS. This performance gap is precisely why layer 2 protocols have become essential infrastructure.

Understanding Layer-2 Protocols: Beyond the Basics

Layer 2 protocols operate as secondary networks anchored to Layer-1 blockchains, processing transactions off-chain before submitting batch confirmations to the main chain. The result is straightforward: congestion drops, fees plummet, and throughput explodes.

The mechanics are elegant. Instead of recording every transaction on Ethereum mainnet—which costs dearly and moves slowly—layer 2 protocols handle bulk transaction processing independently, then settle final states periodically. This architecture delivers three immediate benefits:

1. Cost Revolution for DeFi and dApps Traders conducting yield farming or executing swaps see transaction costs compress by 90-95%. This efficiency transforms unprofitable strategies into viable revenue streams.

2. Speed That Actually Matters Processing moves from 15 TPS to thousands. Users experience near-instantaneous confirmations rather than 12+ second waits.

3. Mainstream Accessibility Lower friction enables blockchain adoption beyond crypto natives. Gaming platforms, supply chain systems, and retail finance applications become feasible.

Mapping the Scaling Landscape: Layer 1, 2, and 3

Layer 1: The Foundation Ethereum and Bitcoin form the settlement layer. They’re secure but congested—the foundational highway that handles consensus and validation.

Layer 2: The Efficiency Tier Layer 2 protocols relieve congestion through off-chain transaction bundling. They inherit Layer-1 security while multiplying throughput.

Layer 3: Specialized Applications These networks build atop layer 2 protocols, optimizing for specific use cases—advanced computation, cross-chain messaging, or application-specific requirements.

The Technology Behind Layer-2 Protocols

Optimistic Rollups: Speed Through Assumption

Optimistic rollups bundle hundreds of transactions into single proofs, assuming validity unless proven otherwise. Arbitrum and Optimism employ this approach.

• Reduces computational load on base layer
• Faster proof generation than zero-knowledge alternatives
• 2,000-4,000 TPS typical throughput

Zero-Knowledge Rollups: Privacy and Efficiency Combined

ZK-rollups generate cryptographic proofs that confirm transaction validity without exposing individual details. Starknet and Manta Network lead this category.

• Enhanced privacy through advanced cryptography
• Minimal blockchain interaction required
• Scales to theoretical millions of TPS

Alternative Architectures

Plasma Chains operate as independent sidechains with periodic Ethereum settlement.

Validium handles validation off-chain while maintaining on-chain security guarantees.

The Top 10 Layer-2 Networks Reshaping Blockchain in 2025

1. Arbitrum: Market Leader

Current Price: $0.19 | Market Cap: $1.08B | Type: Optimistic Rollup

Arbitrum commands over 51% of Ethereum layer 2 TVL, processing up to 4,000 TPS with gas costs reduced by 95% compared to mainnet. Its developer ecosystem hosts DeFi protocols, NFT platforms, and gaming applications. ARB token governs network policy and covers transaction fees.

The project benefits from strong technical execution and established liquidity. However, recent deployment carries inherent risks compared to mature scaling solutions.

2. Optimism: The Reliability Play

Current Price: $0.26 | Market Cap: $510.52M | Type: Optimistic Rollup

Leveraging the OP Stack framework, Optimism delivers 26x faster transactions than Ethereum mainnet while maintaining near-identical security. Its 2,000 TPS baseline scales to 4,000 at peak. Gas cost reductions reach 90%.

Optimism prioritizes decentralization through its governance framework. The OP token powers network operations, with active community participation shaping protocol development.

3. Lightning Network: Bitcoin’s Solution

Throughput: Up to 1 million TPS | Type: Payment Channels

This Bitcoin layer 2 protocol enables instant, near-fee-free micropayments using bi-directional payment channels. Settlement occurs on-chain periodically, inheriting Bitcoin’s security guarantees.

Lightning remains technically complex for mainstream users, with adoption rates lagging mainnet usage. Security considerations require careful channel management.

4. Polygon: The Multichain Ecosystem

Throughput: 65,000 TPS | Type: Multiple (zkRollups, sidechains)

Polygon’s architecture combines multiple scaling approaches. ZkRollups handle high-speed transactions while Proof-of-Stake sidechains like Mumbai provide alternative security models. MATIC token supports gas payments and staking.

With TVL exceeding $4 billion, Polygon hosts leading DeFi protocols (Aave, SushiSwap, Curve) and established NFT marketplaces. Its ecosystem maturity attracts developers and users alike.

5. Base: Coinbase’s Entry Point

Throughput: 2,000 TPS | Type: Optimistic Rollup | TVL: $729M

Built on the OP Stack, Base reduces Ethereum gas costs by up to 95% while maintaining compatibility with existing Ethereum tools. Coinbase’s backing provides institutional credibility and security expertise.

Base represents Coinbase’s infrastructure play, prioritizing simplicity and accessibility for retail users transitioning into decentralized finance.

6. Dymension: Modular Rollup Architecture

Throughput: 20,000 TPS | Type: RollApps

Dymension separates consensus, execution, and data availability functions, allowing developers to customize rollup performance. The Cosmos ecosystem integration provides interoperability via IBC protocol.

This modularity enables specific RollApps to optimize for particular use cases without network-wide impact.

7. Coti: Privacy-First Ethereum Scaling

Current Price: $0.02 | Market Cap: $54.27M | Type: zk Rollup

Transitioning from Cardano to Ethereum layer 2, Coti emphasizes privacy through garbled circuit technology. It targets 100,000 TPS with EVM compatibility for Ethereum developer migration.

COTI tokens migrate to the new Ethereum L2 network, preserving existing token utility.

8. Manta Network: Anonymous Transactions at Scale

Current Price: $0.07 | Market Cap: $33.47M | Type: zk Rollup

Manta Pacific combines EVM compatibility with zero-knowledge privacy. Manta Atlantic handles private identity management through zkSBTs. The network reached third-largest Ethereum L2 TVL status within months of launch.

MANTA token powers network operations while enabling governance participation.

9. Starknet: Cairo and STARK Proofs

Throughput: 2,000-4,000 TPS (theoretical millions) | Type: zk Rollup

Starknet’s STARK proof system offers cryptographic advantages over conventional zero-knowledge approaches. Cairo programming language attracts developers seeking next-generation smart contract capabilities.

The network targets full decentralization while maintaining rapid development velocity.

10. Immutable X: Gaming-Specific Layer 2

Current Price: $0.23 | Market Cap: $190.88M | Type: Validium

Immutable X delivers 9,000+ TPS specifically optimized for gaming and NFT operations. Its architecture achieves near-instant confirmation with minimal fees while maintaining Ethereum mainnet security anchoring.

IMX token supports network operations, staking, and governance. The platform hosts major gaming ecosystems and NFT infrastructure.

Ethereum 2.0 and Layer-2 Protocols: A Complementary Future

Ethereum 2.0’s Danksharding upgrade (specifically Proto-Danksharding) increases mainnet throughput targets to 100,000 TPS. This advancement enhances rather than replaces layer 2 protocols:

• Cost Reduction: Proto-Danksharding slashes L2 transaction fees further by optimizing rollup data storage costs.
• Improved Integration: Ethereum’s upgraded architecture better supports rollup sequencers and state submissions.
• Symbiotic Scaling: L1 and layer 2 protocols work in tandem rather than competitively, each optimizing for specific use cases.

The relationship is complementary. Layer-2 protocols continue handling high-frequency transactions while Ethereum 2.0 improves the underlying settlement layer.

The Verdict: Layer-2 Protocols as Infrastructure

Layer 2 protocols have transcended experimental status to become critical infrastructure. Whether pursuing capital efficiency through DeFi, mass adoption through gaming, or privacy through cryptography, viable layer 2 solutions exist.

2025 marks the inflection point where layer 2 adoption accelerates beyond early adopters. Ethereum’s roadmap, Bitcoin’s Lightning Network expansion, and emerging architectures like Dymension signal that blockchain scalability is transitioning from problem to solved engineering challenge.

The question isn’t whether to use layer 2 protocols—it’s which one fits your specific needs.