What are Layer 2 solutions?
What Are Layer 2 Solutions?
Layer 2 (L2) solutions are built on top of a Layer 1 blockchain to increase speed and reduce fees. Examples: Polygon, Arbitrum, Optimism on Ethereum. They rely on the L1 for security. L2s can have their own tokens for fees or governance. In India, gains from L2 tokens are taxable like any other crypto when you sell.