The foundational network of a blockchain is known as a layer 1 network. It can validate and complete transactions, as demonstrated by examples like Ethereum, Bitcoin, and Solana. It is also referred to as the main network or mainnet. Decentralization and security are generally prioritized from the beginning of Layer 1 blockchains; these are fundamental principles of any reliable network, and are upheld by a broad, international network of developers and users like validators.Due to a lack of any central authority or oversight, these platforms require the technology itself to have an innate amount of security to protect users from scams and attacks. And because of this priority in design, not to mention the immense resources, it takes to maintain a fully functional ecosystem, they’ve often lacked scalability. Therefore, layer-2 solutions were born to manage transactions outside of the Ethereum Mainnet. Let’s find out about the top potential layer-2 project for investors to join with <a href="https://www.builder.news/" alt="Builder.news website" title="Builder.news website" target="_blank" rel="" class="">Builder.news</a> now.&nbsp;<h2>What exactly is the layer-2 solution?</h2>The term "layer 2" refers to a collection of off-chain solutions (independent blockchains) constructed on top of layer 1s to alleviate scale and data constraints. Consider a restaurant kitchen where just a few orders could be filled every hour if each order had to be completed by a single worker from start to finish before being confirmed and delivered. But layer 2s are more like prep stations, where each station can concentrate and do each operation much more quickly. For example, there is a station for washing and chopping food, a station for cooking, and a station for assembling the dishes. When the time is appropriate, the last person can validate that each completed dish matches the order before it is delivered to its destination.The technology is utilized by Visa and other payment processors. Visa aggregates thousands of daily microtransactions from a retailer like Starbucks into batches that are settled in the banking system at regular intervals rather than managing them separately, which would bottleneck the network in minutes. The banks then use their internal version of a settlement layer to store and organize transactions. Visa would be layer 2 in this scenario, while layer 1 would be the larger network of institutions and the government that determines the rules of the financial industry and maintains track of transactions.Similar features used by Ethereum include <a href="https://www.builder.news/crypto-insights/optimistic-rollups-zkrollups-EzsWo" alt="Optimistic Rollups versus ZK-Rollups - What is more optimal for Layer 2?" title="Optimistic Rollups versus ZK-Rollups - What is more optimal for Layer 2?" target="_blank" rel="" class="">Optimistic and zero-knowledge (ZK) rollups</a>, which relieve the mainnet's management of transactions and increase throughput and inclusion of transactions (higher transactions per second). The result is a more seamless and useful user experience.<h2>Why is layer-2 important?</h2><a href="https://www.builder.news/crypto-insights/layer-2-scaling-solutions" alt="Layer 2 scaling solutions" title="Layer 2 scaling solutions - What you need to know" target="_blank" rel="" class="">Layer 2 scaling&nbsp;solutions</a> are crucial because they enable scaling and higher throughput while maintaining the integrity of the Ethereum blockchain, enabling total decentralization, transparency, and security as well as lowering the carbon footprint (less gas, means less energy used, which equates to less carbon).Although the Ethereum blockchain is the most popular and possibly the safest blockchain, it nevertheless has certain drawbacks. The Ethereum Mainnet is notorious for its high gas costs and poor transaction rates (13 transactions per second). The Ethereum blockchain is built on top of Layer 2s, which maintains the speed, scalability, and security of transactions.Considerations for each solution's advantages and cons include throughput, gas costs, security, scalability, and, of course, usefulness. Currently, no layer 2 solutions can meet all of these requirements. However, rollups are a type of layer 2 scaling solution that aims to enhance all of these features.<h2>Top layer-2 projects to invest&nbsp;</h2><img src="https://lh6.googleusercontent.com/MFyBhQaO-Hr-59E2O43jnk8rdpOFIqwtBMX0geVyoDdTb5-OO3SVxvBj4QSpw97FesF1dn5fBIfYS5ZXJhc3zwTSU23fsvG15Tn2nT51_56VzsV5-sGHn3-69kEBBTXyZjzsctTQwsEaHz-YE3BBeRk" alt="Top layer-2 projects to invest&nbsp;" title="Top layer-2 projects to invest&nbsp;" width="624" height="484">Top layer-2 projects ranked by TVL (Source: L2beat)<h3>Arbitrum</h3>Offchain Labs' layer 2 technology, called <a href="https://www.builder.news/crypto-insights/arbitrum-the-mosttvl-layer-2-project" alt="Arbitrum the most-TVL layer 2 project" title="Arbitrum the most-TVL layer 2 project" target="_blank" rel="" class="">Arbitrum</a>, enables smart contract feature development for software developers while also enabling low-cost app scaling for Ethereum. Arbitrum asserts that it takes only five minutes to create an Eth app.Launched in the middle of 2021, Arbitrum gained a lot of popularity and, by November 2021, had over 280k addresses connecting with the network. It has already completed more than 14 million transactions and can scale the Ethereum network by roughly 40k TPS. The Ethereum main chain is where transactions in Arbitrum are verified. Therefore, gas prices are more expensive than many other layer-2 alternatives but only marginally more affordable than Ethereum main chain. The ecosystem has quickly grown thanks to active collaboration with many layer 1 projects and numerous incentives, including whitelisting for any project intending to start on Arbitrum. Comparing Arbitrum to other layer-2 initiatives, it has carved out the top spot on TVL.<img src="https://lh6.googleusercontent.com/XyK2KJGNhFDjHsO1vXmoWPamTP8b3mCuaoH5p8ZGUzFegWucXKls769AqZd8j3Ek71YVj2JHg1ljGNk5mTWRxzt_8T7xS_vnzBd1gJitxgldWmoxHDMNhyctD1C1MbKmwErSgtToluC_RcShNtd_HyQ" alt="Arbitrum TVL" title="Arbitrum TVL" width="624" height="264">Arbitrum TVL (Source: L2beat)As it aims for maximum scalability, it collaborates with projects like Chainlink, Graph Protocol, OKEx, and many others. According to recent rumors, Arbitrum's layer-2 solutions would be used by UniSwap, the largest DEX, after a governance vote. To connect to Ethereum, the solution makes use of an EthBridge. Arbitrum does not have a native token like other Layer 2 solutions, hence it is impossible to assess its investment potential. When ETH 2 merges, Arbitrum is likely to have room as well, much like the other layer-2 solutions. However, people could use some of the Arbitrum DApps to bridge to the Arbitrum ecosystem and become eligible for an Arbitrum token airdrop. People could utilize the <a href="https://portal.arbitrum.one/" alt="Arbitrum One Portal" title="Arbitrum One Portal" target="_blank" rel="nofollow" class="">Arbitrum One Portal</a> to access the DApps on Arbitrum and find out the potential token to invest in.<h3>Optimism</h3><a href="https://www.builder.news/project-review/optimism-op-a-layer2-scaling-solution-for-ethereum-applications" alt="Optimism (OP) - A Layer-2 scaling solution for Ethereum applications" title="Optimism (OP) - A Layer-2 scaling solution for Ethereum applications" target="_blank" rel="" class="">Optimism</a> is a layer 2 framework with a community focus that enables applications to send data to and from the layer 1 blockchain at lightning speeds for a lesser cost. A huge batch of transactions is "rolled" together in an optimistic rollup chain, which is then compressed and processed on layer 1.Numerous apps and integrations, such as DeFi, NFTs, Bridges, and Portfolio trackers, are supported by the Optimism ecosystem. All current proceeds from the project go toward expanding the expansion and sustainability of public goods.OP, a native token from Optimism with a $1.12 market value (at the writing time), was introduced as an investment on June 1st, 2022. Just after the introduction on June 1st, the all-time token high was at about $4.6. But since then, it has decreased primarily as a result of the gloomy cryptocurrency markets. However, as optimism will persist even after the ETH 2.0 integration, investors could expect further price increases.<img src="https://lh4.googleusercontent.com/ZOaijE_eNTZ9Bq2yCswF9wSOt7_lefYWWonRxmvolg27MJFgzrwQs8jgHxIKLTvayii4hq9nxW2wjPnMfvGd0bRyAA5l4kwZ50RP0YQUTlmkcLRKrVVkJ0h8TtZInLvUQxyWJyY8YtVlFGLwJNLIaIs" alt="Optimism TVL" title="Optimism TVL" width="624" height="265">Optimism TVL (Source: L2beat)The environment of Optimism is thriving right now thanks to a wide variety of enterprises. According to L2beat, the project's TVL has also flourished, with a current value of $1.60B, placing it second on the Ethereum layer two (L2) scaling chart. Simultaneously, optimism holds close to 30% of the market.&gt;&gt;&gt; Related:&nbsp;<a href="https://www.builder.news/crypto-insights/optimism-price-surge-everything-happens-for-a-reason-vRZix" alt="Optimism price surge reason" title="Optimism price surge: Everything happens for a reason" target="_blank" rel="" class="">Optimism price surge: Everything happens for a reason</a>.<h3>Loopring</h3>As the scaling solutions ecosystem develops, Loopring is one of the best layer 2 cryptocurrencies to purchase. On the Ethereum network, users can create order book-based and non-custodial exchanges using the open-source, audited Loopring protocol. Users on the Ethereum network can trade and pay with high throughput and cheap costs because of the zero-knowledge (zK) protocol. Decentralized finance (DeFi) users can easily trade, swap, offer liquidity, and facilitate payments in this way without compromising the security of the most well-known smart contract network. While Polygon and Loopring have been engaged in a quiet layer 2 competition for the majority of that time, investor interest in the zKRollup protocol has just started to grow.<a href="https://www.builder.news/project-review/loopring-review-where-zkrollups-become-handy-oeTDm" alt="Loopring review" title="Loopring review: Where zkRollups become handy" target="_blank" rel="" class="">Loopring</a> is capable of 1000x layer 1's high throughput. As an illustration, Loopring is now capable of releasing about 2025 transactions per second. According to other reports, the gas costs for Loopring are 100 times less than the typical layer-1 prices for Ethereum. Loopring maintains constant high liquidity for its coin by employing 16 order rings.<img src="https://lh3.googleusercontent.com/HfTxmQDMSqwCxpKeZnSBFdHz9hf5MXuKew3xKZWLhHtGQolqaXtiVj3EAXEHqrXEoF-4JbQL26gKGq7kYyvz1vV8-_GzJiTcpvXqVBoivaraV-z4wXkHf_NdDT72jxkmltyuKKTVJ9e1PStEhT_fm0E" alt="Loopring TVL" title="Loopring TVL" width="624" height="264">Loopring TVL (Source: L2beat)In 2017, LRC, Loopring's native coin, started trading, at a price of $0.13. As a result of this newfound popularity, the governance token LRC saw a significant increase to its all-time high (ATH) price of $3.75 on November 10 in response to rumors of a potential alliance with the physical video game shop GameStop. LRC is currently trading for just around $0.37, but analysts believe that this currency will eventually reach considerably greater prices.Like many other Layer-2 solutions, Loopring will be very beneficial in the ETH 2.0 era. Many claim that Loopring can easily reach 1000 times the throughput of ETH, which aims to raise its throughput to 100k TPS.<h3>OMG network</h3>As scaling solutions grow increasingly crucial to Ethereum's future, OMG, formerly known as OmiseGo, is another great layer 2 cryptocurrency to purchase right away. MoreVariable Plasma, a cutting-edge scaling solution used by OMG Network, enables quicker transactions and reduces transaction costs by one-third compared to what users would typically pay if they transacted directly on the Ethereum blockchain.The Plasma framework makes transactions less resource-intensive for users by batching all transactions off-chain and validating them as a single transaction on the Ethereum blockchain.The OMG Network uses a governance token with a similar name, called OMG, and the network's network fees are settled using the digital asset.<img src="https://lh3.googleusercontent.com/SKIR_fsnPhiwADunfaJV4A_esmgU-U5MklQ0c23erckl6Xxh-5PIO0R49TVVJFa3kURIRTF9awlMc6FlIfkdK8LhlsMjW_FD4kAS53IZiDcDwrZzsT9a-agumiKO4DbI_ulQ-WsA5MZql-NXDch-9Is" alt="OMG Network TVL" title="OMG Network TVL" width="624" height="263">OMG Network TVL (Source: L2beat)OMG finally experiences some success and much-needed exposure from the crypto market thanks to millions raised in the most recent round of fundraising, which totaled roughly $80 million in Series C funding. Like many other cryptocurrencies, a portion of the total supply of coins is held by the management. OMG presently has a market cap of $272 million. Unlike many other cryptocurrencies, the whole supply has already been created, with active investors controlling about 65 percent of its circulation. OMG Network's TVL, which is worth $3.03 million, is in 14th place and has a 0.06% market share in the emerging sector. The OMG token now has support on the Bitfinex Derivatives platform, which is part of the Bitfinex group.The usage of OMG's technology to lessen carbon footprint is anticipated to result in a long-term increase. The plasma design includes security and scalability for dependability in every situation. The future outcomes might fluctuate, but since everyone has a different level of risk tolerance, it varies what excellent investing advice is. OMG Coin does, however, have the potential to be a rewarding investment, and this will soon be reflected in the price of OMG Network.&gt;&gt;&gt; Relevant: <a href="https://www.builder.news/crypto-insights/where-will-layer-2-solutions-be-after-the-merge-nYC1i" alt="Where will Layer 2 solutions be after The Merge?" title="Where will Layer 2 solutions be after The Merge?" target="_blank" rel="" class="">Where will Layer 2 solutions be after The Merge?</a><h3>ZKSpace</h3>A relatively new ZK-Rollup Ethereum Layer 2 protocol called ZKSpace provides very instantaneous transactions without the need to wait for block confirmations. The ZK project offers a layer 2 NFT protocol that enables NFT projects to issue, mint, distribute, and sell NFTs at a lower cost.ZKSwap, the ground-breaking Layer 2 AMM DEX leveraging ZK-Rollups technology, payment service ZKSquare, and an NFT minting facility and marketplace dubbed ZKSea make up the three primary components of the ZKSpace platform. ZKSpace promises to create EMV-compatible ZK-Roll Ups and deliver the community more layer 2-based products in the near future with an entirely new user interface, NFT compatibility, infinite token listing, smoother withdrawal, optimized efficiency, and multi-chain support.<img src="https://lh4.googleusercontent.com/wlpzi6WeLI7gKDEPEe2iZ0T5H8N6kNMHTBsEc7G59xhgL28OaYdTSwZJA5XWhqEgomlq_Rk1xevFK5dOa_-xcvc4xOXQ3UAvhWUUdTDPs1wFcA9kkFDuisNLVF9E92Kvs1mpdmeRwvX0NaXj4b6ogpY" alt="ZKSpace TVL" title="ZKSpace TVL" width="624" height="264">ZKSpace TVL (Source: L2beat)With a TVL of $45.33 million, ZKSpace is now ranked eighth on L2beat. On August 15, 2022, ZKSpace's public sale of the James Rodriguez Zurda NFT collection will start taking place on its exclusive digital collectibles platform ZKSea. A total of 1,500 unique, limited-edition NFTs with four rarity levels, representing all the great events in James Rodriguez's distinguished football career, make up the Zurda collection. This information serves as a foundation for investors' optimism about ZKSpace's future.ZKS is an <a href="https://www.builder.news/crypto-insights/an-ultimate-guide-on-automated-market-makers-PvtRU" alt="Automated Market Makers guide" title="An ultimate guide on Automated Market Makers" target="_blank" rel="" class="">Automated Market Maker</a>-based token exchange technology. The full set of Uniswap functions are achieved in Layer-2 with ZK-Rollup technology, which also offers unrestricted scalability and anonymity. ZKS provides liquidity providers and traders with swap infrastructure and transactions with extremely high throughput and no gas expenses. The native token ZKS is used to pay for minting NFTs on the L2 marketplace as well as to avoid costs on the DeFi token swap L2 Wallet.<h2>FAQs about layer-2 projects</h2><h3>Is layer-2 safe?</h3>Although many Layer 2 blockchains have at least one extra vulnerability, their security is often comparable to that of the underlying Layer 1 blockchain. The additional vulnerabilities are largely found in the consensus and fraud-prevention systems of the Layer 2 network. The majority of techniques used to verify the validity of all new batches by network members on Layer 2 chains contain flaws.In order to process and validate fresh batches, several projects employ their own Proof of Stake mechanism where users stake cryptos on the network. As there are fewer validators that can be compromised to maliciously alter the network, this would be less secure than Ethereum. There are a few glaring outliers, such as ZK-rollups, which don't appear to have many additional weaknesses. Additionally infamously defective, several token bridges that allow users to trade tokens between networks have had all of their funds siphoned from them.<h3>How to bridge assets to Layer 2?</h3>Cross-chain bridges are necessary to connect layer 1 to layer 2 cryptographic assets. Users can relocate their cryptocurrency assets to use them on other layer-2 blockchains thanks to them. For some layer 2, the lego portion of the bridges is finished, but not for others.<h3>Bottom lines</h3>L2 projects are going to have a field day with the maturing infrastructure and growing integrations all around them. The surge in L2 offers numerous opportunities for investors, with differing risk appetites and desired levels of exposure, to profit. These opportunities are no longer hypothetical. There are several options, whether it is through infrastructure, applications, or native asset farming.<div class="pr-block-special">Disclaimer: This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

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Top layer-2 projects to invest

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