How Does ‘Layer 2 Scaling’ Fundamentally Differ from ‘Layer 1 Scaling’?
Layer 1 scaling involves increasing the base blockchain's capacity (e.g. larger blocks, sharding). Layer 2 scaling involves building protocols on top of the base chain to handle transactions off-chain, then periodically settling the state back to Layer 1.
Layer 2 prioritizes scalability while inheriting Layer 1's security.