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What is Bitcoin Layer 2?

Bitcoin Layer 2 refers to networks built on top of the Bitcoin blockchain to enhance scalability, improve transaction speed, and reduce blockchain fees. Similar to Layer 2 solutions on Ethereum, these networks also enable Bitcoin to interact with smart contracts.

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Bitcoin Layer 2 networks also rely on the mainnet for the final settlement of the transactions on their execution layer; this way, they maintain the level of security and decentralization of the mainnet.