Explainer: how a layer 2 rollup lowers transaction fees

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A layer 2 network processes transactions away from a base blockchain and then reports back to it. The most common design today is the rollup. A rollup collects many user transactions, executes them, and posts a compressed batch of data to the underlying layer 1. Because hundreds of transfers share the cost of one posting, each user pays a smaller fee.

Two families exist. An optimistic rollup assumes a batch is valid unless someone challenges it during a waiting period. A zero-knowledge rollup attaches a validity proof, so the base chain can check the batch immediately. Both rely on data availability: the batch data must be published so anyone can rebuild the rollup’s state.

Most rollups today use a single sequencer to order transactions. That keeps the network fast but introduces a point of failure, which is why decentralising the sequencer is a common roadmap item.

When you move funds to a rollup you usually use a bridge. Withdrawals from optimistic rollups can take days unless you use a third-party liquidity provider.