Layer 1 Blockchain

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21 Aug, 2024

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Layer 1 refers to a blockchain platform’s base network, providing the foundation for layer 2 blockchain. It carries out every on-chain transaction and hence acts as the source of truth of a public ledger. Moreover, it is the only layer directly responsible for validating transactions and safeguarding the network.

This distributed ledger technology records transactions securely on a trustless, immutable, and public ledger. Besides this, it offers the basic security and infrastructure required by the layer 2 blockchain to function properly. This base-level chain has multiple components, such as the cryptographic primitives and consensus mechanism. It can carry out operations independently and complete all transactions without outside assistance.

What Is Layer 1 Blockchain?

Layer 1 blockchain refers to the fundamental base network of any blockchain platform. The layer 2 blockchain is built on top of it.
The base-level chain executes every on-chain transaction. Hence, it serves as a public ledger’s source of truth. This layer is also responsible for safeguarding the blockchain network.
Some of the best layer 1 blockchain are Cardano, Solana, Ethereum, and Bitcoin.
Layer 1 blockchain projects offer benefits like immutability, decentralization, and security. However, they also have limitations like high energy consumption and low scalability.

Layer 1 Blockchain Explained

Level 1 blockchain refers to the base-level chain in blockchain networks. It offers the most crucial services to blockchain platforms, for example, ensuring sufficient security and recording all transactions on a public ledger. This layer establishes the protocol that includes the network structure, transaction systems, security features, and consensus mechanism.

Besides being the foundation for popular blockchain platforms like Ethereum and Bitcoin, it is the underlying technology for decentralized applications or dApps and protocols.

This L1 or layer 1 blockchain carries out operations on a peer-to-peer (P2P) network of nodes. Each of these nodes maintains a copy of the entire blockchain ledger.

The base blockchain protocols use a distributed consensus algorithm, such as proof-of-stake (PoS) or proof-of-work (PoW), to validate and add a new transaction to the blockchain. The base-level chain’s security is achieved via cryptographic techniques, for example, digital signatures and hashing. Such blockchains are immutable, decentralized, and immutable. Such characteristics make them perfect for facilitating trustless transactions and developing decentralized applications.

Components

The base blockchain has the following key components:

Block Production: Miners produce the blockchain’s units or blocks, recorded on the base-level chain. The blocks refer to data structures containing information regarding multiple new transactions and blocks generated previously in a chain. Such blocks create the public ledger or blockchain.
Cryptographic Primitives: This component deals with data security. Considering that data is stored as well as shared over various systems, having a reliable security system is crucial. Blockchains utilize cryptographic techniques to ensure an adequate level of security.
Consensus Mechanism: As noted above, the base blockchain utilizes consensus mechanisms, such as PoW or PoS, to combat the issue of not having any central authority to verify if a transaction is genuine.
Native Assets: Cryptocurrency coins or tokens are another component of the layer 1 chain. The cryptocurrencies are utilized to reward miners or validators and pay transaction fees.
Transaction Finality: This is the assurance that transactions cannot be undone or changed. One must note that the finalization of a transaction can only occur on a network’s base-level chain.
Security: The base blockchain determines all parameters responsible for a network’s security.

Features

Some key features of the base block blockchain are as follows:

It serves as the source of truth for the settlement of transactions.
The base blockchain utilizes a consensus mechanism for incentivizing the network participants to validate and secure the network.
It securely records all transaction data on the blockchain network as a decentralized ledger.
A blockchain network’s base network has a native cryptocurrency token or coin. It is utilized to make payment of the fees for the resources of the network.
It provides the underlying infrastructure on which the development of applications and blockchains can take place.

Examples

Let us look at a few layer 1 examples to understand the concept better.

Example #1

A layer 1 blockchain called Linera announced that it closed a funding round of $6 million; Borderless Capital, a venture capital fund, led the round. The firm is trying to address scalability issues utilizing ‘microchains.’ It will utilize the raised capital to grow its team, expand the developer academy, launch a testnet and a devnet, and establish a strategic presence in the Asia-Pacific region. With this funding round, the Linera has raised funds worth $12 million in total.

Example #2

Suppose ABC coin’s layer 1 blockchain is the underlying architecture securing a popular cryptocurrency. It operates on a PoW consensus mechanism, verifying new blocks through an algorithm that utilizes a cryptographic puzzle that is computationally intensive.

List

Let us look at a list of popular layer 1 blockchain projects:

Ethereum
Cosmos
Near
Cardano
Solana
Polkadot
Avalanche
Algorand
Avalanche
Bitcoin

Advantages & Disadvantages

Let us look at the benefits and limitations of the different layer 1 blockchain projects:

Advantages

The benefits offered by the best layer 1 blockchain are as follows:

Decentralization: A single authority can make alterations to the blockchain network.
Security: Networks are highly secure owing to cryptographic encryption.
Immutability: The reversal of a transaction is impossible once a user performs it. In other words, deleting or changing data on a blockchain is impossible. This makes the system highly dependable.

Disadvantages

Some disadvantages of a base-level blockchain are as follows:

Scalability: One must note that L1 blockchains are not scalable.
Energy Consumption: PoW blockchains consume high electricity as they need powerful computers to solve cryptographic puzzles 24/7.

Layer 1 Blockchain vs Layer 0 Blockchain vs Layer 2 Blockchain

For anyone new to the world of cryptocurrency, the concepts of layer 0, 1, and 2 blockchains can be confusing. Knowing how they differ can help one clearly understand their meaning. So, let’s look at their distinct characteristics.

Layer 1 Blockchain	Layer 0 Blockchain	Layer 2 Blockchain
This is a blockchain network's fundamental, base-level chain, providing the foundation for layer 2 blockchain.	It is the first layer of a blockchain network, enabling smooth interaction with different protocols to establish interconnected value chains.	Built on top of the base-level chain, it helps extend the underlying base-layer network’s capabilities.
It maintains the protocols for safe and secure transactions.	This layer provides the hardware infrastructure.	It hosts applications, such as non-fungible tokens (NFT) and decentralized finance (DeFi) platforms, allowing for innovative use cases in the cryptocurrency space.
Cardano, Bitcoin, and Ethereum are examples of base networks of blockchain platforms.	Polkadot and Cosmos are examples of layer 0 blockchains	Polygon is a L2 scaling solution running on top of Ethereum.

Frequently Asked Questions (FAQs)

1. Which layer 1 blockchain has the most developers?

Ethereum has the highest number of active developers.

2. How do layer 1 blockchains make money?

A layer 1 network’s value is generated from persons carrying out peer-to-peer transactions using that blockchain. The native cryptocurrency of any blockchain, for example, BTC, in the case of Bitcoin, serves as an incentive mechanism, getting individuals to make sure that the data stored on that blockchain is accurate and secure.

3. What is the difference between Layer 1 and Layer 3 blockchains?

Layer 3 in blockchain technology refers to a concept that builds upon layer 2 scaling solutions. It aims to enhance functionality and scalability further. On the other hand, layer 1 blockchain is the base-level blockchain on which the production of blocks takes place. While layer 3 blockchains are responsible for packet addressing, routing, and forwarding, L1 blockchains protect the network and validate transactions.