Layer 1 (or Layer 1) is the mainblockchain , i.e. the foundation on which a crypto network is based. Think of it as the foundation of a building: everything that is built afterwards (Layer 2, dApps) is based on the rules of this layer.
How does a Layer 1 blockchain work?
A Layer 1 blockchain operates independently. Here are its essential components:
1.Consensus mechanism: this is the system by which nodes(validators) agree on the validity of transactions. The most common mechanisms are Proof of Work (PoW) and Proof of Stake (PoS).
2.Protocol rules: These define how transactions are validated, blocks are created and added to the chain, and how the network as a whole works.
3.Transaction and smart contract execution: All transactions and smart contract interactions are executed directly on this base layer.
4.Security and immutability: Layer 1 is responsible for securing the network against attacks and ensuring that transaction history is immutable (cannot be changed).
5.Native currency: Each Layer 1 blockchain typically has its own cryptocurrency that is fundamental to its operation. This is used to cover transaction costs (gas fees) and to incentivize miners or validators of the network (e.g. Bitcoin uses BTC, Ethereum uses ETH).
The Blockchain Trilemma Challenge
Layer 1 blockchains frequently face the so-called “Blockchain Trilemma”, an idea that posits the difficulty (or even impossibility, according to some opinions) of maximizing three crucial attributes simultaneously:
- Decentralization: how distributed the network is and how few centralized control points there are.
- Security: How resilient the network is to attacks.
- Scalability: How many transactions the network can process in a given time frame.
Many Layer 1 blockchains compromise on one of these characteristics to optimize the other two. For example, Bitcoin prioritizes decentralization and security over scalability (small number of transactions per second), while other Layer 1 networks may sacrifice some decentralization for greater scalability.
Examples of Layer 1 blockchains
- Bitcoin (BTC): The first and largest Layer 1 blockchain, optimized for secure and decentralized transfer of value.
- Ethereum (ETH): a Layer 1 blockchain that introduced smart contracts, dApps, DeFi and NFTs.
- Solana (SOL): A Layer 1 focused on scalability and high transaction speeds.
In summary, Layer 1 is the foundation of any blockchain ecosystem, defining the ground rules and ensuring the security and integrity of all operations. Want to know about the price evolution of a specific cryptocurrency? You can get up-to-date data directly from our dedicated cryptocurrency price page.