What is Layer 2?
Secondary protocols built on top of a base blockchain to dramatically improve transaction scaling. While Layer 2s are useful for retail payments, Lygos Finance locks collateral for $25K–$100M loans on Bitcoin Layer 1 using DLCs.
Glossary
Layer 2
Secondary protocols built on top of a base blockchain to dramatically improve transaction scaling.
Full Definition
Layer 2 solutions, such as the Lightning Network or Rollups, process transactions off the main blockchain to reduce congestion and fees. They rely on the underlying Layer 1 blockchain for ultimate security and final settlement. Layer 2s are critical for achieving global scalability for digital assets without altering the core protocol.
How Lygos Uses This
While Layer 2s are useful for retail payments, Lygos Finance locks collateral for $25K–$100M loans on Bitcoin Layer 1 using DLCs.
Why this matters for borrowers
Understanding Layer 2 helps you evaluate how different platforms handle your Bitcoin. Not all custody models are equal, and the technical details determine whether your BTC is truly safe.
Related Terms
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