Over the course of 2020, a surge in DeFi activity has meant Ethereum has seen its network usage surge, making the network more expensive to transact. In order to accommodate increased usage long-term, Ethereum can scale through layer 2 (L2) scaling solutions by taking transactional activity off-chain in order to relieve the base chain of network congestion.
In this report, we will explore the different types of L2 solutions that exist today and dive deeper into specific projects that are implementing their respective solution, through the lens of value accrual and investable opportunities.
