What is Layer 1 in blockchain?

Summary
(such as Bitcoin, Binance Chain, Ethereum), and the infrastructure of these networks. Layer 1 blockchains can verify and complete transactions without the participation of other networks. Improving the scalability of Layer 1 networks is very difficult, as Bitcoin has proven. To solve this problem, developers have created Layer 2 protocols that rely on the security and consensus of Layer 1 networks. Bitcoin's Lightning Network is a typical example of a Layer 2 protocol. The Lightning Network allows users to freely trade first and then write it to the main chain.

IntroductionThe terms Layer 1 and Layer 2 can help us understand the architecture of different blockchains, projects, and development tools. If you’ve ever wondered what the relationship is between Polygon and Ethereum, or between Polkadot and its parachains, understanding the different blockchain layers can help unravel the mystery.


What is Layer 1?Layer 1 network is another name for the underlying blockchain. Binance Smart Chain (BNB), Ethereum (ETH), Bitcoin (BTC), and Solana are all Layer-1 protocols. We call them Layer 1 because they are the main networks in their ecosystems. Off-chain solutions and Layer 2 solutions are built on the main chain.
In other words, the Layer 1 protocol is able to process and complete transactions on its own blockchain, and comes with its own native token for paying transaction fees.

Layer 1 ScalingLayer 1 networks generally have difficulty in scalability. Faced with growing transaction demand, Bitcoin and other large blockchains are trying to speed up transaction processing. The Proof of Work (PoW) consensus mechanism used by Bitcoin requires a lot of computing resources.
PoW takes into account both decentralization and security, but during peak transaction periods, the network speed will still decrease, resulting in longer transaction confirmation times and higher fees.
For years, blockchain developers have been researching scalability solutions, but have yet to agree on the best alternative. The options for Layer 1 scaling include:
1. Increase the block size so that each block can process more transactions.
2. Change the consensus mechanism. The upcoming Ethereum 2.0 version adopts this solution.
3. Implement sharding to split the database.
Improving Layer 1 requires a lot of effort. In many cases, not all network users will agree to such changes. Doing so may lead to a split in the community or even a hard fork. The split of Bitcoin Cash from Bitcoin in 2017 was the result of a hard fork.
Segregated Witness (SegWit)Bitcoin's SegWit (Segregated Witness) is an example of a Layer 1 scaling solution. Segregated Witness increases Bitcoin's throughput by changing the way block data is organized (removing digital signatures from transaction data). This frees up block space, allowing each block to process more transactions without affecting the security of the network. Segwit was implemented via a reverse-compatible soft fork. This means that Bitcoin nodes that have not yet been updated to include Segregated Witness (SegWit) can still process transactions.

What is Layer 1 Sharding?Sharding is a common Layer 1 scaling solution that can be used to increase transaction throughput. It is a database segmentation technique that can be applied to the distributed ledger of blockchain. The network, along with the nodes on it, is divided into different shards to spread the workload and increase transaction speed. Each shard handles a portion of the activity of the entire network, that is, each shard has its own transactions, its own nodes, and independent blocks.
After sharding, there is no need to save a complete copy of the blockchain on each node. Each node will write the completed work to the main chain and share local data in real time, including address balances and other key parameters.

Layer 1 vs. Layer 2Layer 1 has some bottlenecks that cannot be broken. Due to technical limitations, it is difficult or almost impossible to implement certain changes on the blockchain mainnet. For example, Ethereum is upgrading to a proof-of-stake (PoS) system, but the entire process has taken several years.
Layer 1 itself is not suitable for some use cases due to scalability issues. The transaction process on the Bitcoin network takes too long to realistically run any blockchain games on the network. However, game developers may still want to take advantage of the security and decentralization properties of Layer 1. In that case, the best approach is to build a Layer 2 solution on top of this network.
Lightning NetworkLayer 2 solutions are built on Layer 1 and rely on Layer 1 to complete transactions. The Lightning Network is a famous example. During peak traffic periods, it can take hours to complete a transaction on the Bitcoin network. The Lightning Network allows users to make quick payments with Bitcoin off the main chain and submit their balances to the main chain later. This aggregates everyone's transactions into one final record, saving time and resources.

Layer 1 Blockchain ExampleNow that we know what Layer 1 is, let’s look at some examples. There are many different types of Layer 1 blockchains. Many blockchains support unique use cases. Not all blockchains are like Bitcoin or Ethereum. To solve the blockchain triangle and strike a good balance between security, decentralization, and scalability, each network has its own set of solutions.
ElrondElrond is a Layer 1 network created in 2018. The network uses sharding technology to improve performance and scalability. The Elrond blockchain can process more than 100,000 transactions per second. The Secure Proof of Stake (SPoS) consensus protocol and adaptive state sharding are two of its unique features.
Adaptive state sharding refers to splitting or merging shards as network users increase or decrease. The overall architecture of the network, including its state and transactions, will be split. Validators will also be assigned to different shards, reducing the risk of shards being maliciously taken over.
Elrond's native token EGLD is used to settle transaction fees, deploy DApps, and reward users who participate in the network verification mechanism. At the same time, the Elrond network has obtained negative carbon dioxide emission certification, and the amount of carbon dioxide offset exceeds the emissions of the PoS mechanism.
HarmonyHarmony is a Layer 1 network that uses Efficient Proof of Stake (EPoS) and sharding technology. The blockchain mainnet has four shards, which simultaneously create and verify new blocks. Each shard runs at its own speed, with different block heights.
Currently, Harmony is implementing a "cross-chain finance" strategy to attract developers and users. The trustless cross-chain bridge connecting Ethereum and Bitcoin allows users to exchange tokens without taking the custody risks common in bridging, which plays an important role in Harmony's strategy. Harmony relies on decentralized autonomous organizations (DAOs) and zero-knowledge proofs to achieve its core vision of expanding Web3.
Multi-chain and cross-chain seem to be the future development direction of DeFi (decentralized finance), which makes Harmony's bridging service more attractive to users. Non-fungible token infrastructure, DAO tools and inter-protocol bridging are the key areas of focus for Harmony.
Its native token ONE is used to pay for network transaction fees. Users can also stake tokens to participate in Harmony's consensus mechanism and governance. Validators who successfully participate will receive block rewards and transaction fees.
ForeheadCelo is a Layer 1 network that was forked from Go Ethereum in 2017. Since the fork, the network has undergone some major changes, including implementing PoS and enabling a unique address system. The Celo Web3 ecosystem includes decentralized finance, non-fungible tokens, and payment solutions. The network has confirmed more than 100 million transactions. On Celo, anyone can use a phone number or email address as a public key. No special hardware is required to run the blockchain, and standard computers can handle it easily.
Celo's main token, CELO, is a standard utility token for security, transactions, and rewards. The network also uses cUSD, cEUR, and cREAL as stablecoins. These tokens are generated by users, and the mechanism of stable peg is similar to MakerDAO's DAI token. In addition, transactions made with Celo stablecoins can be paid with any other Celo assets.
The volatility and entry difficulty of the cryptocurrency market will discourage many people, and the purpose of Celo's adoption of address system and stablecoin is to improve convenience and thus promote cryptocurrency.
THORChainTHORChain is a cross-chain permissionless decentralized exchange (DEX). The Layer 1 network is built using the Cosmos SDK and verifies transactions through the Tendermint consensus mechanism. The main goal of THORChain is to achieve decentralized cross-chain liquidity, eliminating the process of asset pegs or packaging, so that cross-chain investors do not need to bear the additional risks brought by both.
During operation, THORChain plays the role of a vault administrator, creating decentralized liquidity and removing centralized intermediaries by supervising deposits and accesses. RUNE is the native token of THORChain, which is used to pay transaction fees, participate in governance, verify transactions, and protect network security.
THORChain's automated market maker (AMM) model uses RUNE as the base currency, and users can use RUNE to exchange for any other supported assets. To some extent, the operation of the project is similar to the cross-chain Uniswap, where RUNE acts as a settlement asset and security asset for the liquidity pool.
KavaKava, a Layer 1 blockchain, combines the speed and interoperability of Cosmos with the developer support system of Ethereum. The Kava network uses a "shared chain" architecture, which is characterized by providing different chains for the EVM and Cosmos SDK development environment. With IBC support on the Cosmos shared chain, decentralized applications deployed by developers can run seamlessly between the Cosmos and Ethereum ecosystems.
Kava uses the Tendermint PoS consensus mechanism to provide strong scalability for applications on the EVM co-chain. The Kava network is funded by KavaDAO, and the public on-chain developer incentive mechanism on the network rewards the top 100 projects on each co-chain based on the usage of the project.
Kava supports two types of tokens, the native utility token and governance token KAVA, and the stablecoin USDX pegged to the US dollar. KAVA is used to pay transaction fees, and validators can stake tokens to generate network consensus. Users can delegate staked KAVA tokens to validators and earn a portion of the issued KAVA coins. Stakers and validators can also vote for governance proposals to determine the parameters of the network.
IoTeXIoTeX was founded in 2017 and is a Layer 1 network that focuses on integrating blockchain and the Internet of Things. IoTeX users can control the data generated by devices and let machines support DApps, assets, and services. Users' personal information has certain value, and managing information through blockchain can ensure the security of information.
IoTeX combines software with hardware to provide a new solution for controlling privacy and data without sacrificing user experience. Users can use a system called MachineFi to earn digital assets using real-world data.
IoTeX has launched two noteworthy hardware products, namely Ucam and Pebble Tracker. Ucam is an advanced home security camera that allows users to monitor their home from anywhere and have complete data privacy. Pebble Tracker is a 4G-enabled smart global positioning system with tracking function that can not only track GPS data, but also real-time environmental data, including temperature, humidity and air quality.
In terms of blockchain architecture, there are many Layer 2 protocols based on IoTeX. The blockchain will provide tools to create custom networks that use IoTeX for final confirmation. These chains can also interact and share information through IoTeX. Developers can easily create new child chains to meet the specific needs of their own IoT devices. IoTeX's token IOTX is used to pay transaction fees, staking, governance, and network verification.


SummarizeThere are multiple Layer 1 networks and Layer 2 protocols in today's blockchain ecosystem. Although it is easy to get confused, as long as you master the basic concepts, you can easily understand the overall architecture. Mastering the basic concepts is very useful when studying new blockchain projects, especially those focusing on network interoperability and cross-chain solutions.