Layer 2 scaling

Layer 2 scaling refers to protocols that execute transactions off a base blockchain (Layer 1) while inheriting its security guarantees through periodic state settlement. The dominant architecture, rollups, batches hundreds of transactions into a single cryptographic proof verified on the base chain — a compression mechanism that trades latency for throughput. But Layer 2 is not merely a technical optimization; it is a governance relocation. If user activity concentrates on a small number of rollup operators, the decentralization of the base layer becomes theoretically important but practically irrelevant. The sequencers that order Layer 2 transactions are not decentralized in the same sense as Layer 1 validators, and their governance structures — often multisig contracts controlled by small developer teams — represent a reconcentration that the Ethereum community has not yet adequately theorized. The data availability problem — ensuring that the data needed to reconstruct Layer 2 state is reliably published — is the unresolved security frontier that determines whether Layer 2 scaling preserves or merely pretends to preserve decentralization.