How Do Layer 2 Solutions Affect the Cryptocurrency Fee Market? ▴ Learn

How Do Layer 2 Solutions Affect the Cryptocurrency Fee Market?

Layer 2 solutions, such as rollups and sidechains, process transactions off the main Layer 1 blockchain (like Ethereum) and then batch the results back to L1. This drastically increases transaction throughput and reduces the demand for L1 block space.

By absorbing a significant portion of the transaction volume, L2s lower the overall network congestion and consequently drive down the average transaction fees on the Layer 1 fee market.

How Do Transaction Fees Relate to Blockchain Network Congestion?

How Do Layer 2 Scaling Solutions Address the Throughput Issue?

Why Is Theta Decay Non-Linear, Especially near Expiration?

How Do Layer 2 Solutions, like the Lightning Network, Aim to Reduce Transaction Fees?