On-chain Transfer vs Layer 2
When to send directly on-chain vs when to use Layer 2 or Lightning.
Choosing between on-chain and Layer 2 transaction depends on amount, urgency and recipient.
On-chain Bitcoin (Mainnet):
•When: large value, settlement, coinjoin
•Average fee: $1-20 (depends on mempool)
•Finality: 1 confirmation (~10 min), 6 confirmations (~1h)
•Examples: sending BTC to cold storage, exchange deposit
Lightning Network:
•When: smaller amounts, instant payments, remittance
•Fee: < $0.001
•Finality: instant (< 1 second)
•Limit: channel capacity (typically < 0.1 BTC)
•Examples: paying for coffee, podcast streaming, gaming
Ethereum Mainnet:
•When: high value DeFi, final settlement
•Fee: $5-50 (depends on gas price)
•Finality: 12 seconds (PoS)
Ethereum L2 (Arbitrum, Base, Optimism):
•When: DeFi trading, frequent transactions, NFT
•Fee: $0.01-0.50
•Finality: L2 fast, L1 settlement ~7 days (Optimistic)
•Bridge: bridge once to L2, trade cheaply
Solana:
•When: fast transactions, gaming, DeFi
•Fee: ~$0.00025
•Finality: 0.4 seconds
Decision tree:
•Less than $10 → Lightning or Solana
•$10-$1000, DeFi → Ethereum L2
•$1000+ final settlement → Ethereum mainnet or Bitcoin