Within decentralized ecosystems, all is not uniform. Diverse blockchains can be segregated as layer-1, layer-2, layer-3, and even layer-0 entities. While each layer beckons a detailed discussion, a layer-1 blockchain is considered the foundational unit of this technological revolution. Layer-1 blockchains work as the base layers. They allow companies, developers, and builders to create apps and resources. All while giving access to the native perks related to scalability, security, and decentralization.
This guide delves into the world of layer-1 blockchains. We shall see how they operate, the core mechanisms of the most popular layer-1 options, and these networks’ underlying innovation and applications.
Our methodology for choosing the best affiliate programs
Here, we highlight several platforms: Coinbase, Kraken, OKX, Wirex, and KuCoin. We recommend these platforms due to the strength of their offerings and support for key layer-1 cryptos.
In testing these platforms, we evaluated OKX’s diverse trading options by exploring its range of layer-1 cryptocurrencies. We also focused on Kraken’s security measures for trading several assets. Additionally, we evaluated KuCoin’s platform by examining its user interface for simplicity and efficiency in navigating and trading various layer-1 cryptocurrencies. This involved testing the ease of executing trades, accessing market data, and managing assets with these specific coins. For Wirex, we tested some of the features of W-Pay, including their non-custodial Debit Cards (both Visa and Mastercard) for crypto payments. Lastly, we examined Coinbase’s APY for staked coins, noting that it peaked at around 10% on the platform.
As you navigate these exchanges, consider how their strengths align with your requirements and preferences. Ultimately, your choice of platform should resonate with your specific needs in the layer-1 cryptocurrency world, ensuring a fulfilling and successful crypto journey.
Learn more about BeInCrypto’s methodology verification here.
- Our methodology for choosing the best affiliate programs
- Unpacking a layer-1 blockchain
- Key attributes and components of a Layer-1 blockchain:
- Addressing scalability and transaction speeds in layer-1 chains
- What are layer-1 network examples?
- How far can layer-1 chains innovate?
- Layer-1 vs layer-2 vs layer-3?
- Will a layer-1 chain ever be enough?
- Frequently asked questions
Unpacking a layer-1 blockchain
Imagine you plan to build a towering blockchain-specific building — an app in the more literal sense. It is the layer-1 blockchain that would then serve as the foundation of the building (app). You can consider a layer-1 blockchain the primary architecture that best represents blockchain technology’s implementation.
As the primary blockchain layer, a layer-1 chain maintains the distributed ledgers. These chains can also process transactions and network integrity via peer-to-peer communications.
The likes of Bitcoin and Ethereum are some of the more established layer-1 chains. These networks have seen significant adoption in recent years. The presence of native tokens can also identify layer-1 chains — BTC for Bitcoin, ETH for Ethereum, and so on and so forth.
The building analogy and layer-1 chains
Let us take a closer look at the building analogy. As mentioned, layer-1 is more like a foundation layer, which helps form the basic structure of the building. Some of the primary purposes include hosting and executing smart contracts, validating transactions, and maintaining the ledger — as the foundational tasks.
Now consider layer-2 blockchains as the additional building floors. You would ideate and develop these floors to make the building or, rather, the blockchain technology more functional. You can interpret these as Bitcoin’s native Lightning Network or the Polygon ecosystem built atop Ethereum.
Layer-0 blockchains, like Polkadot, work as the infrastructure layer supporting the foundation layer or the Layer-1. They are loaded with technologies and protocols that allow layer-1 chains to work seamlessly.
An interconnected setup could picture Ethereum as layer-1, Rollups as layer-2 technology, and Polkadot’s Parachain network. layer-0.
Did you know? Each Polkadot Parachain can also work as a layer-1 blockchain, boasting novel use cases and utility.
Key attributes and components of a Layer-1 blockchain:
Every element or layer of blockchain technology is meant to exude security and scalability-specific traits. Therefore, the primary job of a layer-1 chain is to work around the blockchain trilemma bottleneck. This means a layer-1 blockchain should find the right balance between decentralization, scalability, and security.
Also, layer-1 chains are termed parent chains, offering security to the hosted DApps. Additionally, they exhibit air-tight consensus mechanisms like the proof-of-work (PoW) for BTC, proof-of-stake (PoS) for ETH, and more.
When it comes to the functionality of layer-1 chains, the consensus mechanisms play a major role. The chain-specific consensus mechanism determines the security-specific elements of the given layer-1 blockchain. For instance, Bitcoin, with its proof-of-work (PoW) consensus mechanism, has nodes as its security crusaders. These nodes are responsible for validating and even relaying transactions and blocks to keep the distributed ledger updated.
Plus, the PoW ecosystem, associated with a layer-1 chain, also comprises miners who do the hard yards and use computational power to keep the network secure.
Similarly, proof-of-stake layer-1 chains like Ethereum — and even Solana to a certain extent — have a network of validators to keep the network secure. In PoS chains, the security angle is represented by the locked stakes of the native coins.
Another interesting element of layer-1 operation is the element of decentralization that comes to the fore, courtesy of the different miners, nodes, and validators exhibiting fair power distribution. However, scalability challenges often affect the layer-1 or parent chains as more stakeholders can slow down transaction processing.
Addressing scalability and transaction speeds in layer-1 chains
As mentioned, lack of scalability and sluggish transaction speeds remain problematic for layer-1 chains — especially the more popular ones — due to the diversified network of nodes and validators. Plus, when the network demand peaks, the transaction speeds associated with the layer-1 chains drop further.
At present, Bitcoin works in the 4-7 TPS range, whereas the best-case scenario for Ethereum is anywhere between 15 and 30 transactions per second. That is where newer innovations like sharding and layer-2 solutions come in to speed up the transaction processing and improve the scalability of the layer-1 chains.
Sharding works as the layer-1 native solution, like the one proposed for Ethereum in the long run. The idea here is to distribute a layer-1 network in smaller shards, with each shard capable of handling several transactions and smart contracts on its own. Apart from sharding, layer-2 solutions like Polygon, Arbitrum, and more for Ethereum also make sense. Besides sharding and layer-2 solutions, sidechains can also help layer-1 chains scale.
What are layer-1 network examples?
Now that we know how layer-1 blockchains work, let us take a closer look at the examples. We’ve already identified Bitcoin and Ethereum as the notable layer-1 chain. However, the likes of Cardano, Solana, and the Binance Smart Chain are also impactful layer-1 networks.
While Cardano uses the PoS consensus, Solana is more of a proof-of-history and PoS hybrid. BSC, on the other hand, is Ethereum-compatible and can handle interoperable smart contracts and DApps.
If the layer-1 chains and their corresponding native coins, such as ADA, SOL, and BNB, are of interest, you can purchase them on the following BeInCrypto recommended platforms:
How far can layer-1 chains innovate?
Well, layer-1 chains are for the blockchain technology purists. Scalability and innovations involving layer-2 scaling solutions often do not agree with users who prefer legacy chains. So here are the possible innovations that can remain localized to a layer-1 chain, helping users with security, scalability, and other benefits:
- Improved consensus: In case security and decentralization are the concerns, new layer-1s can bring in novel consensus mechanisms like proof-of-space, proof-of-burn, and more.
- Interoperability protocols: Layer-1s need to become more interoperable — capable of communicating with other layer-1 chains, sidechains, and other networks. Cosmos (ATOM) is already doing its bit in this regard via the Cosmos Hub.
- Advanced cryptography: If security gets compromised with the layer-1 chains focusing too heavily on scalability and decentralization, they can resort to quantum-resistant blockchain-specific cryptography to safeguard operations against futuristic threats.
- Improved governance models: Another way to improve the integrity of layer-1 networks is to incorporate better on-chain network governance protocols. Having these can facilitate better security measures.
- Energy-efficient mining: In case there are PoW layer-1 chains in sight, energy-efficient mining can be made a norm, helping the stakeholders navigate the complex and regulation-specific global waters.
- Enhanced privacy traits: Layer-1 chains can directly bring in technologies like zero-knowledge proofs, offering better control to the users over their data.
An example of layer-1 innovation:
Besides these innovations, any layer-1 chain can also benefit from the inclusion of machine learning. Other innovations include access to asset fractionalization protocols and advanced data storage options. The latter would be useful to make use of the existing block size as a way to tackle scalability. All that without having to rely on layer-2 projects.
Layer-1 vs layer-2 vs layer-3?
Blockchain diversity is not limited to layer-0, layer-1, or even layer-2. Layer-3 blockchain networks, like Orbs, aim to solve blockchain trilemma concerns and scalability issues in the most novel way possible. With so many terminologies being thrown around, let’s unpack the concept of layer-3 chains in unison with layer-1 and layer-2 chains.
“If layer-1 becomes cheap enough, I literally foresee things like receipts of everyday purchases being published to blockchains. Because it’ll just be the simplest tool out there for achieving the desired guarantees of verifiability, non-double-spending, etc.”
Vitalik Buterin, Co-Founder of Ethereum: X
As seen previously, layer-1 is the foundational layer, and layer-2 is there for scaling and making the parent chain faster. You can consider layer-3 as the application layer. Circling back to the building analogy, a layer-3 chain works as the interior enhancement made to the additional floors, which are layer-2 chains.
Layer-3 chains are all about paving the way for better blockchain applications and can find their use in DeFi, decentralized gaming, NFT marketplaces, and more.
Will a layer-1 chain ever be enough?
Despite the continued innovation in decentralized networks, layer-1 blockchains are still held in high regard, courtesy of their independent security measures, improved sovereignty, and sizable user base. Plus, the layer-1 chains are general purpose and allow a diverse array of builders to innovate and create DApps on them. But then, for layer-1 blockchain to be enough, they will have to get faster — a need that has fathered several layer-2 solutions. And most importantly, layer-2 chains should not be singled out as competition. Instead, you should consider them as complementary technologies to layer-1 chains, making their role indispensable in the broader scheme of blockchain networks.
Frequently asked questions
What is layer-1 and layer-2 in blockchain?
What is layer-0 and layer-1 blockchain?
Is Solana layer-1 or 2?
Is Cardano a layer-2 blockchain?
Is Polkadot layer-1 or 2?
Is MATIC layer-1 or 2?
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