Layer 1 vs Layer 2 refer to different types of blockchain solutions. Layer 1 is the base blockchain protocol, such as Ethereum or Bitcoin, that directly processes and records transactions. Layer 2, on the other hand, operates on top of Layer 1, enhancing scalability and reducing transaction costs by offloading certain operations. Layer 2 solutions like the Lightning Network for Bitcoin or Optimistic Rollups for Ethereum increase transaction throughput and speed while maintaining the security of the underlying Layer 1 blockchain.
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