How Do ‘Layer 2’ Scaling Solutions like Optimism or Arbitrum Reduce Gas Costs?

Layer 2 solutions process transactions off the main blockchain (Layer 1, e.g. Ethereum) but post the final, compressed data back to L1.

They use techniques like optimistic rollups or zero-knowledge rollups to bundle hundreds of transactions into a single L1 transaction. By amortizing the L1 gas cost across many users, the effective transaction fee for each individual user is drastically reduced.