Layer 1 is the base network of a blockchain. This blockchain layer executes all on-chain transactions, acting as a public ledger. The Layer 1 protocol processes transactions by logging your crypto wallet via asymmetric keys and corresponding crypto token balances. The transaction has to pass through a consensus mechanism that is unique to each crypto platform to finalize a blockchain trade. Layer 1 blockchains can host their crypto tokens, which are used for gas fees and other transaction costs.
The choice of a consensus mechanism is based on three vital features: scalability, security, and decentralization. The trade-off between these features is commonly known as the blockchain trilemma. The issues that Layer 1 protocols cannot solve, typically scalability, are covered by Layer 2 protocols built on them.
Features of Layer 1 blockchain
The most popular blockchains are Layer 1 protocols such as Bitcoin, Ethereum, and Cardano. These blockchains share several features that define them as Layer 1 crypto chains.
Block production
Blocks are individual units of a blockchain and are created by validators or miners. After validation, these blocks are recorded on the Layer 1 blockchain. Blocks consist of information on new transactions and a reference to previous blocks. This chain creates a public ledger known as the blockchain that enables transactions to be recorded.
Transaction finality
Transaction finality is the assertion that a blockchain transaction cannot be altered or changed. Transaction finality is when a blockchain transaction is recorded in an irrevocable state. The time it takes to verify blockchain transactions depends on how a blockchain is designed. Blockchain transactions can be processed on other layers, but the Layer 1 blockchain can only finalize them.
Crypto assets
Crypto coins are used to pay gas or transaction fees and to reward validators on Layer 1 blockchains. Some popular crypto coins are BTC, ETH, and DOGE crypto coins. These crypto coins are essential for the functioning of the Layer 1 blockchain. Crypto assets that as hosted on other blockchains are known as tokens like DAI, LINK, and SAND.
Security
The Layer 1 blockchain defines the parameters responsible for network security. These parameters include the consensus mechanism and the rules based on which validators can interact on a blockchain network. Other blockchain layers can provide little network security, but Layer 1 is ultimately responsible for blockchain network security.
Advantages of Layer 1 Blockchains
Decentralisation
Blockchain networks gained popularity primarily due to being decentralised. No single entity can make decisions for a blockchain network. Crypto users have a say in the decisions of a blockchain protocol.
Immutability
Once a crypto transaction is completed, it cannot be altered or reversed. This feature makes the blockchain network more reliable.
Security
Blockchain protocols are highly secure due to their cryptographic encryption, making them an attractive investment option.
Disadvantages of Layer 1 blockchains
Scalability
Layer 1 blockchains are not scalable and may require off-chain scaling solutions to fulfil user demand.
Energy Consumption
Proof-of-work (PoW) blockchains are known for their high energy consumption. PoW blockchains require powerful computers to work around the clock to solve cryptographic puzzles. Proof-of-stake (PoS) blockchains solve this high energy consumption issue.
Layer 1 Blockchain Examples
Bitcoin: Layer 1 is the underlying infrastructure that secures the largest crypto in the market. Bitcoin uses the proof-of-work consensus mechanism to verify new blocks through cryptographic puzzles. The Bitcoin network is considered to be the most secure and decentralized blockchain platform, but transaction processing can take up to an hour.
Ethereum: This Layer 1 network is the second-largest in terms of market cap and introduced the use of smart contracts. Smart contracts are computer programs that execute when pre-set conditions are met. The Ethereum network recently transitioned from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism.
How many Layer 1 blockchains are there?
There are over 10,000 protocols using blockchain technology, and most are Layer 1 solutions. There are about 81 million crypto wallet users across blockchain networks.
Layer 1 scaling solutions
Most layer-1 blockchains do not scale well, and the most popular blockchains can only reach speeds between 7 and 20 transactions per second. Layer 1 scaling solutions like Layer 2 protocols or side chains are built on top of Layer 1 blockchains to resolve scalability issues. These scaling solutions share the same security feature as the Layer 1 protocol but bundle many transactions to increase network transaction speeds.
Conclusion
It is easy to get confused as there are several Layer 1 and 2 protocols, but it becomes simple once you understand the overall concept and architecture. This knowledge of the different blockchain layers can be helpful when researching new crypto projects.
Layer 1 blockchains are the most popular form of blockchains and have revolutionized the world of technology, especially the financial world. There are concerns with Layer 1 blockchain’s high costs and lack of scalability, but these issues can be addressed through Layer 2 solutions or sharding. Layer 1 blockchains will play a vital role in future payment systems.
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