Layer 2 solutions can be roughly divided into two parts: one is the network responsible for processing transactions; the other is the smart contract deployed on the underlying blockchain, which is responsible for resolving any disagreements and transmitting the consensus reached by the Layer 2 network to the underlying blockchain for verification.

Layer 2 networks can execute transactions and perform computations quickly. Different networks increase transaction throughput in completely different ways. But one thing these Layer 2 networks have in common is that they submit some kind of verifiable cryptographic proof to the underlying blockchain at the time of settlement to prove the authenticity of the state change. Some Layer 2s create proofs in advance and submit them to the underlying blockchain, while others create retroactive proofs later.

In addition, different Layer 2 networks have different ways of implementing smart contracts on the underlying blockchain, but the core functions of smart contracts are the same, namely:

1Save and release funds and transfer to Layer 2;

2 Receives proof submitted by Layer 2, verifies, resolves disagreements, and finally confirms the transaction.