What Is Layer 1 Blockchain and How Do Such Solutions Work?

Being the main structure of the blockchain, Layer 1 determines the scalability of projects. Among the well-known examples of this layer are Bitcoin, Ethereum, Solana, and BNB Chain.

Below we will find out how these Layer 1 blockchain solutions affect the scalability of higher-tier crypto projects (and how they can help you to improve your decentralized project).

How Does Scalability of Blockchain Projects Work?

So what is at the heart of scalability in blockchains?

First of all, it means their higher performance and higher transaction processing speed. Considering the huge potential and business goals of new decentralized solutions and applications, ensuring this feature is a crucial and pressing issue for all participants in this market.

Due to block size limitations and the inability to create multiple blocks at the same time, providing scalability is the key to speeding up the entire network, as it allows projects to process new digital records faster. Thanks to this, you can increase the number of new users in your project without worrying that some of them will have to wait too long to confirm the addition of a new record.

Layer 1 Blockchain: How to Explain This Concept?

So what exactly do tech experts mean under the Level 1 term? Let’s figure it out.

What is a Layer 1 Blockchain?

Layer 1 blockchain refers to a base network, providing scalability within the network. Thus, the use of solutions of this level allows the developers of the project to achieve its higher performance and increase the number of computing operations for a certain period of time.

We already mentioned the most popular representatives of this level at the very beginning of the article — these are Bitcoin and Ethereum. They are completely autonomous and can verify and complete transactions without the involvement of other networks. As for the reliability of transactions carried out within these networks, these blockchains require the confirmation of miners or validators.

If we talk about the solutions built on the basis of Bitcoin and Ethereum, usually, they need some changes in internal protocols to provide the appropriate performance and increase the number of transactions per second (TPS).

However, it’s also important to understand that the actual scalability of Layer 1 depends on some physical and economic factors. The first factor is, in particular, the need to increase the size of data blocks, the time of their generation, as well as change the consensus mechanism and some other properties. At the same time, the above Layer 1 solutions cannot endlessly cope with the ever-growing number of project users.

Ultimately, optimizing the scalability of Layer 1 networks is quite difficult and expensive in practice. This is why blockchain developers often resort to Layer 2 scaling based on security protocols and consensus in Layer 1 networks. As a result, developers get the desired scaling without burdening the entire system.

What Is a Layer 2 Blockchain?

So, what is the peculiarity of Layer 2?

Basically, this solution is able to solve the performance problem by scaling out of the main chain. This is an add-on on top of Layer 1, which doesn’t change the basic protocols and fundamental rules, but at the same time transfers some of the transactional workloads to neighboring systems.

As an example, we can take Bitcoin, the Layer 1 blockchain, and the Lightning Network, a Layer 2 payment protocol.

What is the difference between Layer 1 and Layer 2 Blockchain Solutions?

Although Layer 1 and Layer 2 blockchains share the same goal of increasing the scalability of the projects where they are used, the first option achieves this through changes to the underlying network protocol or the implementation of new consensus mechanisms, while the second option involves third-party integrations that may also include Layer 1 solutions.

Thus, Layer 2 solutions refer to the services outside the main network and may include, for example, sharing transaction orders and reducing workload. Also, they use third-party protocols for Layer 1 blockchain integration and increasing transactional throughput. Note that developers can build several network levels upon the main chain at once. These solutions are called nested blockchains which in practice are interconnected webs that reduce the processing burden and boost scalability.

Main Peculiarities of Layer One Blockchain Solutions

As we noted above, Layer 1 solutions are placed on the base level of blockchain for increasing transaction capacity and speed. Thus, while comparing crypto Layer 1 vs Layer 2, we can state that Layer one blockchain protocols process and complete transactions within the solution they refer to, without the need to engage other networks. This means that to provide scaling, developers have to change the underlying network protocol and, in particular, the size of blocks, the consensus mechanism, and sharding.

Consensus Protocol

Blockchain networks, due to their decentralization, require transaction validation for every node. At the same time, the consensus algorithm has to check the accuracy of operations and verify whether the transaction is correct and the protocol is kept. As for the main consensus algorithms, we can highlight PoW (Proof-of-Work) and PoS (Proof-of-Stake).

The first one is Bitcoin-based. To complete a transaction, network members need to solve an arbitrary mathematical problem to find the hash and publicly prove the operation to avoid system cheating. The first one who finds the right solution gets an opportunity to add a block to the chain and receive a reward (usually, in crypto).

The second one, Proof-of-Stake, was created as an alternative to the PoW algorithm to overcome its shortcomings, such as high power consumption. In particular, it reduces the amount of computational load required to validate the blocks and transactions that keep the project secured. Computing power is replaced by staking, whereby a person’s mining ability is randomized by the network.

Sharding

Sharding is a method for data distribution which is aimed to increase transaction throughput. It eliminates the need for nodes to save a complete copy of the entire blockchain. Instead of this, each node reports to the main chain by sharing the state of local data, including address balance and other key metrics. Also, transactions split into small and manageable chunks. Thus, the workload is distributed evenly across the network which helps crypto projects to consume the computing power of many nodes at once.

Benefits of Layer One Blockchain Solutions

Layer 1 solutions speed up processing time and increase TPS. Such solutions as changing block sizes over the base protocol, modifying the consensus mechanism, and sharding, can help the decentralized projects process significantly more transactions in one specific block.

The Best Layer 1 Blockchains: Our Top-3

Typically, a Layer 1 is a base for a crypto ecosystem or a smart contract platform. Each Layer 1 solution is designed and optimized for its own purposes. When it comes to the blockchain comparison, we can take into account the three key features: scalability, decentralization, and security. Let’s consider the best Layer 1 blockchain list of three platforms that have proven themselves as reliable ecosystems.

Velas

Velas (VLX), started in 2019, is probably the best Layer 1 blockchain in its niche and the fastest EVM with a hybrid consensus algorithm based on Delegated Proof-of-Stake and Proof-of-History. This solution provides high-level scalability, advanced performance, and top-notch security mechanisms. This platform was built to host the nextGen decentralized applications. It can be used for a variety of purposes, including transactions, smart contract operations, and various services. On this platform, developers can write smart contracts in C, Rust, and Solidity, as well as integrate Ethereum projects with minimal rework.

Key features:

  • Capacity — 50,000+ TPS;
  • Transaction finality — 1.2 seconds;
  • Transaction fee > $ 0.00001.

Avalanche

This project is also called AVAX. It was created in 2020 and was introduced as the fastest smart contract platform in the blockchain industry. The main goal of this platform was to increase scalability without sacrificing speed or decentralization. The platform is based on three digital solutions: exchange chain (X-Chain), contract chain (C-Chain), and the platform chain (P-Chain). Also note that Avalanche uses scale-out subnets to create custom interoperable blockchains. The number of possible subnets is not limited. Also, it requires minimal hardware to run a node, making it more decentralized than other Layer 1 platforms.

Key features:

  • Capacity — up to 4500+ TPS;
  • EVM compatible;
  • A large number of validators (more than 1300).

Polkadot

Polkadot (DOT), launched in 2017, was presented as a scalable and interoperable ecosystem with multi-chain architecture. It allows new blockchain projects to interact and integrate securely while allowing them to have completely arbitrary state transition functions. Polkadot unites multiple blockchains into a unified network and consists of three different components: relay chain, parachains, and bridges. Multiple decentralized projects were built on top of the Polkadot to exchange data and information securely and fast.

Key features:

  • The system can process more than 1,000 TPS;
  • Each parachain is a full-fledged blockchain;
  • 900 million tokens (DOT).

Bottom Line

The main benefit of Layer 1 solutions is that they eliminate the need to add third-party integrations to the existing architecture and require only some changes in the base protocols. As for Layer 2 ones, they don’t affect the underlying protocols but imply the use of additional solutions. At the same time, these solutions allow developers to reduce the cost of transaction fees and the time needed for verification. Thus, both layers work together successfully to increase the performance of the blockchain network.

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