New Step in Layer 2 Scaling Solutions: Top 10 Notable Projects of 2024

Since the launch of Bitcoin in 2008, blockchain technology has undergone profound changes. Today, blockchain is not only a payment network but also powers the entire DeFi, GameFi, NFT, metaverse, and Web3 ecosystems. However, as blockchain adoption becomes widespread, scalability issues have become the biggest challenge.

Bitcoin processes about 7 transactions per second (TPS), while Ethereum Layer-1 manages only around 15 TPS as of 2023 — a figure significantly lower than Visa’s 1,700 TPS. To address this, Layer 2 solutions have emerged as a viable option, helping Layer-1 blockchains overcome the “impossible trilemma” of scalability, security, and decentralization.

How Do Layer 2 Solutions Work and Why Are They Important?

Layer 2 are scaling protocols designed to operate on top of Layer-1 blockchains like Ethereum. Instead of processing all transactions on the main chain, Layer 2 handles them off-chain (off-chain) and periodically submits summaries back to the main blockchain.

This approach offers three main benefits:

• Significantly reducing network congestion on the main blockchain
• Cutting transaction fees (sometimes up to 90-95%)
• Increasing throughput from tens to thousands of transactions per second

This creates an environment where decentralized applications (dApps) and DeFi platforms become economically feasible, paving the way for widespread blockchain adoption.

Different Types of Layer 2 Technologies

Optimistic Rollups: Trusted Verification

Optimistic Rollups assume all transactions are valid unless proven otherwise. This approach simplifies verification processes and reduces computational costs.

Zero-Knowledge Rollups (zk Rollups): Privacy First

zk Rollups bundle transactions into a single proof without revealing personal details. This method offers high efficiency and better privacy protection.

Plasma Chains: Specialized Sidechains

Plasma chains operate as subordinate blockchains, processing transactions independently and periodically confirming states with the main chain.

Validium: Balancing Security and Speed

Validium moves transactions off-chain but maintains security through cryptographic proofs.

Top 10 Layer 2 Projects in 2024

1. Arbitrum - Market Leader

• Technology: Optimistic Rollup
• Throughput: 2,000-4,000 TPS
• TVL: $10.7 billion
• Market Cap: $1.08B (ARB current price: $0.19)

Arbitrum leads the Ethereum Layer 2 market with over 51% of TVL as of 2024. It processes transactions more than 10 times faster than the Ethereum mainnet and reduces gas costs by up to 95%. Its ecosystem includes major DeFi protocols, NFT marketplaces, and rapidly growing gaming platforms.

The native token ARB is used for transaction fees, staking, and governance. With a strong development team, Arbitrum continuously upgrades and expands, positioning itself as a top Layer 2 solution.

2. Optimism - Main Competitor

• Technology: Optimistic Rollup
• Throughput: 2,000 TPS (peak 4,000 TPS)
• TVL: $5.5 billion
• Market Cap: $511.10M (OP current price: $0.26)

Optimism offers Ethereum security without scalability issues. It processes transactions 26 times faster than the Ethereum mainnet and reduces gas costs by up to 90%.

The OP token is used for transaction fees, staking, and governance. Optimism focuses on community self-governance and hosts an ecosystem of DeFi, NFT, and DAO projects.

3. Lightning Network - Bitcoin’s Layer 2 Solution

• Technology: Bi-directional payment channels, Smart contracts
• Throughput: Up to 1 million TPS
• TVL: $198 million+

Lightning Network enables faster, cheaper, and more accessible Bitcoin transactions. It operates off-chain, allowing instant microtransactions with low fees while leveraging Bitcoin’s security. Transaction fees are significantly reduced, and transactions are nearly instantaneous, ideal for daily use.

4. Polygon - Robust Multi-Chain Ecosystem

• Technology: zk Rollup
• Throughput: 65,000 TPS
• TVL: $4 billion
• Market Cap: $7.5 billion+

Polygon is a multi-chain ecosystem offering various Layer 2 solutions to scale Ethereum. With a throughput of 65,000 TPS, it significantly outperforms Ethereum mainnet. Its low transaction fees make it an ideal choice for DeFi, NFT marketplaces, and frequent blockchain interactions.

The MATIC token is used for gas fees, staking, and governance. Polygon maintains one of the highest DeFi TVLs among Layer 2 networks.

5. Base - Coinbase’s Layer 2 Network

• Technology: Optimistic Rollup (OP Stack)
• Throughput: 2,000 TPS
• TVL: $729 million

Coinbase’s Base is designed to enhance Ethereum’s potential by increasing transaction speed and reducing fees. Targeting 2,000 TPS and cutting Ethereum gas costs by up to 95%, Base promises near-instant transactions.

Supported by Coinbase, Base benefits from security expertise and a large user base. The project is still developing, but its focus on speed, affordability, and developer friendliness makes it a noteworthy Layer 2 solution.

6. Dymension - Advanced Modular Blockchain

• Technology: RollApps
• Throughput: 20,000 TPS
• TVL: 10.42 million DYM
• Market Cap: $30.04M (DYM current price: $0.07)

Dymension is a modular blockchain ecosystem comprising specialized blockchains called RollApps built on a secure payment hub. As the first Layer 2 network within the Cosmos ecosystem, Dymension separates functions like consensus, execution, and data availability.

Developers can customize RollApps for specific needs, choosing suitable consensus mechanisms and smart contracts. Its modular design allows scaling individual RollApps without affecting the entire network.

7. Coti - Transitioning to Ethereum Layer 2

• Technology: zk Rollup
• Throughput: 100,000 TPS
• TVL: $28.98 million
• Market Cap: $54.42M (COTI current price: $0.02)

Initially a Layer 2 solution for Cardano, Coti is transitioning to become a privacy-focused Layer 2 network for Ethereum. This shift aims to provide faster, cheaper transactions with enhanced security and Ethereum compatibility.

COTI token is used for fees, staking, governance, and as part of the trustworthiness assessment mechanism. Coti is moving from a DAG architecture to an EVM-compatible architecture (EVM).

8. Manta Network - Focused on Privacy

• Technology: zk Rollup
• Throughput: 4,000 TPS
• TVL: $951 million
• Market Cap: $33.42M (MANTA current price: $0.07)

Manta Network is a privacy-centric ecosystem for Ethereum, offering anonymous transactions and secure smart contracts. It includes Manta Pacific (EVM-compatible Layer 2) and Manta Atlantic (privacy-preserving identity management).

Zero-knowledge cryptography is central to Manta, ensuring transaction validity without revealing privacy. Manta has rapidly gained prominence, surpassing Base to become Ethereum’s third-largest Layer 2 by TVL as of 2024.

9. Starknet - Maximum Performance with STARK Proofs

• Technology: zk Rollup (STARK proofs)
• Throughput: 2,000-4,000 TPS (theoretically millions of TPS)
• TVL: $164 million

Starknet uses STARK proofs, a type of zero-knowledge proof, to verify off-chain transactions. It offers unmatched speed with theoretical processing capabilities reaching millions of TPS and significantly reduces transaction fees.

Starknet provides a developer-friendly environment with Cairo programming language. Committed to becoming a fully decentralized network, Starknet hosts a rapidly growing ecosystem of innovative DeFi, NFT, and gaming dApps.

10. Immutable X (IMX) - Gaming Focused

• Technology: Validium (ZK-Rollups)
• Throughput: 9,000 TPS+
• TVL: $169 million
• Market Cap: $192.37M (IMX current price: $0.23)

Immutable X is a dedicated Layer 2 network designed for gaming, offering scalability, affordability, and security to enhance Web3 experiences for players and developers. It achieves over 4,000 TPS with near-instant transactions.

IMX token powers the network and is used for fees, staking, and governance. Immutable X promises a seamless gaming experience with fast transactions, true NFT ownership, and cross-game interoperability.

The Future of Layer 2 Under Ethereum 2.0

Ethereum 2.0 is laying the groundwork for significant advancements in blockchain technology. By 2024, the integration of Danksharding, especially Proto-Danksharding, is expected to boost Ethereum’s throughput to an impressive 100,000 TPS.

These developments bring positive implications for Layer 2 networks:

Efficiency and cost optimization: Danksharding will optimize Layer 2 efficiency, reducing transaction fees on these networks. Proto-Danksharding, the initial phase, will significantly cut transaction costs.

Smoother integration: Proto-Danksharding will improve Ethereum’s support for Layer 2 rollups, enabling tighter integration, better communication, and a seamless user experience.

Enhanced user experience: Faster confirmations, less network congestion, and ultra-low gas fees — that’s the potential of Danksharding. Users can expect faster transactions and lower costs.

Ethereum 2.0 does not render Layer 2 solutions obsolete; rather, it fosters a symbiotic relationship where Ethereum 2.0 and Layer 2 networks work together to create a more efficient and scalable blockchain ecosystem.

Conclusion

Layer 2 protocols have emerged as a key solution in improving the blockchain ecosystem. By addressing Layer 1’s limitations, Layer 2 networks mark a significant transition in blockchain technology development.

In 2024, Layer 2 is not just a trend; it’s a transformative shift. From booming Ethereum Layer 2 projects to innovative Bitcoin scaling solutions, these networks are shaping the future of the crypto industry. They are paving the way for widespread adoption, unlocking new opportunities, and demonstrating that blockchain can be fast, cost-effective, and accessible to everyone.