Layer 2 of a blockchain refers to solutions that are built on top of layer 1 blockchains and aim to enhance the efficiency and scalability of the blockchain through the use of third-party technologies, networks, or protocols.

Layer 2 solutions are designed to address the scalability limitations of layer 1 blockchains by offloading some of the workload from the main chain to a separate layer. This can be done through a variety of means, such as through the use of off-chain transactions, sidechains, or other technologies that enable transactions to be processed outside of the main chain.

Layer 2 solutions are typically implemented as an extension or enhancement to a layer 1 blockchain and are designed to be compatible with the underlying protocols of the blockchain. They may be used for a variety of purposes, such as increasing the capacity of the blockchain, improving the speed of transactions, or enabling new types of applications or use cases.

Overall, layer 2 solutions are an important component of many blockchain networks and play a key role in improving the scalability and efficiency of the network.

Example: 

“The team behind the XYZ blockchain was looking for ways to further improve the scalability of their network, so they decided to implement a layer 2 solution. They developed a sidechain that would allow for off-chain transactions, which would enable more transactions to be processed simultaneously without overloading the main chain. The implementation of the layer 2 solution was a success and significantly improved the performance of the network.”