Which Layer-2 Scaling Technology Should You Focus On? A 2025 Market Overview

The blockchain industry has reached an inflection point. While Bitcoin processes roughly 7 transactions per second and Ethereum manages around 15 TPS, traditional payment systems like Visa handle over 1,700 TPS. This performance gap isn’t just a technical footnote—it’s the core reason why Layer-2 scaling has become essential infrastructure for the crypto ecosystem.

Layer-2 solutions operate as secondary networks sitting atop Layer-1 blockchains, bundling transactions off-chain and settling them on the main network. This architecture dramatically cuts gas fees, accelerates settlement times, and enables blockchain applications to scale without compromising security or decentralization.

Understanding the Layer-2 Landscape in 2025

Before diving into specific projects, it’s crucial to understand how Layer-2 solutions actually work. Unlike Layer-1 blockchains that process every transaction directly, Layer-2 networks batch transactions together and submit cryptographic proofs to the mainnet. This approach reduces the computational burden on Layer-1 while maintaining its security guarantees.

The mechanics are straightforward: transactions occur off-chain at near-instant speeds with minimal fees, then periodically settle on Ethereum or Bitcoin. For users, this means paying a fraction of mainnet costs while experiencing transaction finality in seconds rather than minutes.

The Three Main Scaling Approaches Competing for Market Share

Rollup-Based Solutions (Optimistic & Zero-Knowledge)

Optimistic Rollups assume all transactions are valid unless proven otherwise, enabling faster processing with lower computational overhead. Zero-knowledge rollups use cryptographic proofs to verify batches of transactions, enhancing privacy while maintaining security.

Sidechain and Plasma Architectures

These operate as parallel chains with independent security models, offering maximum flexibility but requiring bridges to interact with Layer-1. They’re ideal for specialized use cases like gaming or NFTs.

Payment Channels

Bi-directional channels lock collateral and enable near-infinite transactions between parties before final settlement. This approach maximizes speed but works best for specific transaction types.

Comparing Leading Layer-2 Projects: Performance vs. Market Position

High-Throughput Rollup Leaders

Arbitrum delivers 2,000-4,000 TPS with current pricing at $0.19 and a $1.07B market cap. It commands over 51% market share among Ethereum Layer-2s by TVL. The ARB token powers transaction fees, governance, and staking, making it the dominant player in the optimistic rollup space.

Optimism processes up to 2,000 TPS with OP trading at $0.26 and a $505.66M circulating market cap. Its architecture mirrors Arbitrum’s optimistic approach but has carved out a distinct ecosystem focused on user experience and developer tools.

Manta Network represents the privacy-first approach with 4,000 TPS capacity. MANTA tokens currently trade at $0.07 with a $33.21M market cap. What distinguishes Manta is its zero-knowledge infrastructure designed specifically for confidential transactions and private smart contracts—a growing demand segment.

Bitcoin-Native Scaling

Lightning Network operates fundamentally differently from Ethereum Layer-2s. It uses bi-directional payment channels to enable up to 1 million theoretical TPS for Bitcoin, with $198M+ locked in channels. This solution excels at micropayments and everyday transactions, though it requires technical sophistication for average users.

Specialized Gaming and NFT Solutions

Immutable X (IMX) focuses exclusively on gaming and NFT applications with 9,000+ TPS. The IMX token trades at $0.23 with $190.14M market cap. Its validium architecture provides the speed required for frequent NFT transfers and in-game transactions.

Coti (COTI) is undergoing a significant transition from a Cardano Layer-2 to an Ethereum-focused privacy network. Currently priced at $0.02 with $54.14M market cap, it’s repositioning itself with zk-rollup technology and EVM compatibility for developers seeking privacy-first DeFi applications.

Modular and Cross-Chain Approaches

Polygon (MATIC) operates as a multichain ecosystem rather than a single Layer-2, supporting multiple scaling solutions including zk-rollups. Its architecture enables 65,000+ TPS throughput and maintains the highest DeFi TVL among competing Layer-2 networks.

Dymension introduces a modular design where individual rollups (called RollApps) can be customized for specific applications. It supports 20,000 TPS while enabling developers to choose their own consensus mechanisms and data availability solutions.

Starknet employs STARK proofs to achieve theoretical millions of TPS. It offers a Cairo programming language and attracts developers interested in complex computational tasks beyond simple payment processing.

Coinbase-Backed Infrastructure

Base represents institutional-grade Layer-2 infrastructure with 2,000 TPS using optimistic rollups. Built on the OP Stack and backed by Coinbase’s security expertise, it bridges Ethereum’s present capabilities with its scalable future.

Gas Fee Reduction: The Real-World Impact

Transaction costs tell the story better than technical specifications. A typical Ethereum mainnet token swap costs $15-50 depending on network congestion. The same operation on Arbitrum costs $0.10-0.50, on Optimism $0.15-0.75, and on Polygon as little as $0.01-0.05.

This cost differential hasn’t gone unnoticed. DeFi platforms like Aave, Curve, and SushiSwap have deployed versions across multiple Layer-2s, while NFT marketplaces OpenSea and Rarible now support several scaling solutions simultaneously.

How Ethereum 2.0 Changes the Layer-2 Equation

Ethereum 2.0’s implementation of Proto-Danksharding fundamentally alters Layer-2 economics. By increasing Ethereum’s data availability capacity, Proto-Danksharding reduces the cost for Layer-2s to post transaction batches on Layer-1, which directly translates to even lower fees for end users.

Current projections suggest Ethereum could achieve 100,000 TPS once full Danksharding rolls out. This doesn’t make Layer-2s obsolete—instead, it creates a synergistic relationship where Layer-2 solutions become even more efficient and affordable, enabling applications currently impossible due to cost constraints.

Choosing Your Layer-2: Use Cases and Deployment Strategy

For DeFi Traders and Yield Farmers: Arbitrum and Optimism offer the largest liquidity pools and most mature ecosystems. The cost reduction alone justifies the ecosystem complexity trade-off.

For Gaming Studios: Immutable X provides purpose-built infrastructure with pre-integrated wallets and NFT standards, reducing development friction.

For Privacy-Conscious Applications: Manta Network and Coti’s privacy features enable confidential transactions and hidden smart contract state—essential for institutional users.

For Bitcoin Users: Lightning Network remains the only production-grade Layer-2 for Bitcoin, though its technical complexity limits mainstream adoption.

For Enterprise Blockchain Solutions: Base and Polygon offer institutional backing and compliance-friendly architectures.

What 2025 Holds for Layer-2 Development

Layer-2 scaling technology continues evolving rapidly. We’re seeing convergence around zk-rollups as the preferred technology for new Layer-2 launches, driven by superior composability and reduced trust assumptions. Payment channels are gaining traction for specific use cases, while optimistic rollups remain dominant by TVL due to their mature ecosystems.

The competitive pressure between Layer-2 solutions is intensifying. Arbitrum maintains its market-share lead but faces serious challenges from emerging competitors. Manta Network’s privacy focus and Polygon’s multichain flexibility represent genuinely differentiated approaches rather than simple technical iterations.

The Bottom Line

Layer-2 scaling technology has graduated from experimental infrastructure to production-grade systems managing billions in daily transaction volume. The choice between solutions increasingly depends on specific application requirements rather than fundamental technical superiority—each platform has found its niche.

For most users, Arbitrum or Optimism provide the safest bet with largest communities and deepest liquidity. For specialized applications, the single-purpose Layer-2s like Immutable X or Manta offer compelling advantages. As Ethereum 2.0 upgrades proceed, expect further cost reductions across all Layer-2s, accelerating mainstream adoption beyond current DeFi and gaming enthusiasts.