Execution on L2, settlement on L1
Rollups execute transactions off the main chain (Layer 2) where throughput is unconstrained by the Layer 1 consensus. A sequencer collects transactions, executes them against a local state tree, and groups batches for posting to Layer 1. Only the batch header and merkle roots are recorded on-chain, not the full transaction data, compressing overhead by orders of magnitude.
Data availability and finality
Transaction data must post to L1 so users can reconstruct the L2 state independently, preserving the security property that no single sequencer can steal funds. Once the L1 block containing the rollup batch is finalized (12 blocks on Ethereum), the L2 transaction becomes final. Users can withdraw from L2 to L1 by proving their exit transaction is included in the batch.