Layer 1 vs. Layer 2 Networks

"Layer" sounds like a minor technical detail, so why does it change how much a transaction costs and how fast it settles? It helps to picture a highway with tollbooths that get busier during rush hour, versus a shuttle van that groups several passengers together before merging onto that same highway. Layer 1 is the highway itself — the base network where every transaction competes directly for limited space. Layer 2 is the shuttle — it handles activity off to the side while still relying on Layer 1 for security and settlement. Batching passengers before merging back onto the highway, like the shuttle does, is the most common way Layer 2 networks do this today, though not the only way.

Layer 1 Networks

• Base Settlement: transactions are recorded directly on the underlying network itself.
• Competitive Fee Bidding: fees rise and fall based on how many people are competing for limited block space at once.
• Final Record: once confirmed here, a transaction is the actual settled state, not a preview of it.

Layer 2 Networks

• Off-Base Processing: activity happens away from the base network, which still backs its security and settlement.
• Lower, Steadier Fees: handling activity off the base network, commonly by batching, spreads costs across many transactions at once.
• Delayed Settlement: that activity still has to settle back on Layer 1 before it's truly final.

The distinction is about where finality actually happens: Layer 1 is where a transaction is finally settled, and Layer 2 simply defers a batch of activity until it reaches that point. See Network Monitor for how activity across a network gets tracked.