Ethereum basics - Cask Protocol

Ethereum Layer 2 Explained – Rollups, Lower Fees and the Risks to Know

Posted on October 17, 2026 by Dustin Perez

Layer 2 (L2) is the collective term for a set of Ethereum scaling solutions. According to ethereum.org, a layer 2 is a separate blockchain that extends Ethereum and inherits Ethereum’s security guarantees. Layer 1 (L1) blockchains, such as Ethereum and Bitcoin, are the foundation that layer 2 projects build on.

Why layer 2 is needed

The “blockchain trilemma” says that a simple blockchain can only achieve two of three properties: decentralization, security and scalability. Ethereum Mainnet handles more than a million transactions a day, but only around 15 transactions per second. High demand therefore pushes up fees. Layer 2 networks bundle many transactions into one transaction on layer 1, which cuts fees and raises throughput while still settling on Ethereum.

Rollups: the main approach

Rollups bundle hundreds of transactions into one L1 transaction and post the transaction data to Ethereum. Execution happens separately on the rollup. Once the data is on L1, reverting a rollup transaction would mean reverting Ethereum itself.
Optimistic rollups assume transactions are valid, but anyone can challenge a suspicious one with a fault proof.
Zero-knowledge (ZK) rollups compute transactions off-chain and submit them to Mainnet together with a validity proof.

Not the same as sidechains

Sidechains and validiums also run alongside the main chain and connect to it through bridges. Unlike rollups, they do not get their security or data availability from Ethereum, so they rely on different trust assumptions.

Risks to know

ethereum.org notes that many layer 2 projects are still young and somewhat experimental, and that no layer 2 has been as battle-tested as Ethereum Mainnet. Do your own research. For example, L2BEAT publishes risk assessments for individual projects. When you move funds, make sure the recipient is on the same network as you. See also how Web3 wallets work and ERC-20 tokens.

Risk notice: crypto-assets are highly volatile and you can lose all the money you put in. This article is general information, not financial or investment advice. Always verify smart contracts, wallets and service providers yourself before using them.

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ERC-20 Tokens Explained – How the Ethereum Token Standard Works

Posted on October 17, 2026 by Dustin Perez

On Ethereum, tokens can represent almost anything: reputation points, an in-game skill, a share in a company, a fiat currency such as USD or an ounce of gold. To keep all these tokens compatible with wallets, exchanges and apps, developers use shared standards. The best known of these is ERC-20.

What is ERC-20?

ERC-20 (Ethereum Request for Comments 20) was proposed by Fabian Vogelsteller in November 2015. It is a standard for fungible tokens: every token of the same type is identical in type and value, just as one ETH equals any other ETH. Any smart contract that implements the standard methods and events counts as an ERC-20 token contract, and it keeps track of the tokens it creates.

What the standard lets you do

transfer tokens from one account to another
check an account’s token balance
read the total supply of the token
approve a third-party account to spend a set amount of your tokens

The core functions

name(), symbol(), decimals() – basic token information
totalSupply() and balanceOf(address) – supply and balances
transfer() and transferFrom() – moving tokens
approve() and allowance() – letting another address (often a smart contract) spend tokens for you
Events: Transfer and Approval

Why approvals matter for your safety

When you use an app, you often approve its smart contract to spend your tokens. The European supervisory authorities’ crypto-fraud factsheet advises revoking suspicious permissions you have given to smart contracts. Many wallets and blockchain explorers can show which contracts can currently spend your tokens. Read more about how Web3 wallets work. ERC-20 tokens can also be used on Ethereum layer 2 networks.

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Web3 Wallet Explained – Accounts, Keys, Seed Phrases and Staying Safe

Posted on October 17, 2026 by Dustin Perez

A Web3 wallet is the application you use to control your Ethereum account. According to ethereum.org, it lets you sign in to applications, check your balance, send transactions and prove your identity. The wallet provider does not hold your funds. It only gives you a window to see your assets and tools to manage them, so you can switch wallet providers at any time.

Accounts, keys and addresses

An account is a pair of keys.
The public key is used to create your address, which you can share freely. Ethereum addresses always start with “0x”.
The private key must stay secret, because it is used to sign transactions.
A wallet is the tool that uses those keys to interact with your account. Most wallets can generate a new account for you.

Types of wallets

Hardware wallets keep your crypto offline.
Mobile wallet apps
Browser wallets and browser extension wallets
Desktop applications for macOS, Windows or Linux

Seed phrases and safety

Many wallets give you a seed phrase, a list of words that ethereum.org describes as often the only way to recover your wallet. Write it down and keep it somewhere safe, not on a computer. As ethereum.org puts it, “there’s no customer support in crypto”. Anyone who learns your seed phrase or private key can take your assets, and a lost private key means the funds are gone for good. Legitimate companies never ask for your passwords or security codes by email, text or phone.

Bookmark your web wallet to avoid phishing sites.
Never type an address by hand. Copy it or scan a QR code instead.
Make sure the recipient is on the same network as you, because the same token can exist on several networks.
Keep enough ETH in the wallet to pay transaction fees.
Triple-check everything, because transactions cannot be reversed.

Exchange or self-custody?

A centralized exchange links your account to a username and password that you can recover the usual way. But you are then trusting the exchange to hold your funds, and if it runs into financial trouble, your funds are at risk. Once you have a wallet, you can also hold ERC-20 tokens, use Ethereum layer 2 networks or read our overview of Ethereum.