What are Layer 2 solutions in blockchain protocols?

Layer 2 solutions in blockchain protocols refer to mechanisms built on top of the primary blockchain (Layer 1) that aim to improve scalability and increase transaction speeds while utilizing the security features of the main chain. These solutions address the limitations of Layer 1 blockchains, which often face congestion and high fees during periods of high demand. By offloading some transactional work onto secondary layers, Layer 2 solutions can process a greater number of transactions more efficiently.

Common examples of Layer 2 solutions include state channels, sidechains, and rollups, each designed to handle transactions off the main chain and periodically settle with it, thus significantly speeding up the transaction process and reducing costs for users.

The other options, while related to blockchain technology, do not accurately describe Layer 2 solutions. Some protocols do focus on governance or smart contract execution, but these are not specifically classified under the Layer 2 category meant for scalability improvements.