Ethereum Layer 2 solutions, such as Arbitrum and Optimism, offer significant investment opportunities due to their ability to address Ethereum’s scalability limitations. By processing transactions off-chain and settling them on Layer 1, they reduce gas fees and increase throughput, making Ethereum more practical for widespread use. Compared to Layer 1 competitors like Solana or Avalanche, which boast high transaction speeds natively, Layer 2 solutions retain Ethereum’s security and decentralization while enhancing performance. This synergy makes them attractive to investors who believe Ethereum’s ecosystem will remain dominant, though competition from faster Layer 1 chains could challenge their long-term relevance if Ethereum’s base layer fails to evolve.