What is Layer 1 in blockchain?

Abstract: (such as Bitcoin, Binance Smart Chain, Ethereum), and the infrastructure of these networks. Layer 1 blockchains can verify and complete transactions without the need for other networks. Enhancing the scalability of Layer 1 networks is very difficult, as evidenced by Bitcoin. To address this issue, developers have created Layer 2 protocols that rely on the security and consensus operation of the Layer 1 network. The Lightning Network is a typical example of a Layer 2 protocol for Bitcoin. The Lightning Network allows users to conduct free transactions first, and then write them to the main chain. The terms Layer 1 and Layer 2 can help us understand the architecture of different blockchains, projects, and development tools. If you have ever wondered about the relationship between Polygon and Ethereum, or Polkadot and its parachains, understanding the different layers of blockchains can help unravel the mystery.

What is Layer 1? 

Layer 1 networks are also known as the base layer of blockchain. Binance Smart Chain (BNB), Ethereum (ETH), Bitcoin (BTC), and Solana all belong to Layer-1 protocols. They are called 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, Layer 1 protocols can process and complete transactions on their own blockchain, while also using native tokens for transaction fees.

There are inherent scalability problems with Layer 1 networks. Faced with growing transaction demands, 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. Although PoW balances decentralization and security, network speeds can still decrease during peak transaction periods, leading to longer transaction confirmation times and higher fees.

For many years, blockchain developers have been researching scalability solutions, but have not yet reached a consensus on the optimal alternative. Optional solutions for Layer 1 scalability include:

1. Increase block size to handle more transactions per block.

2. Change the consensus mechanism. This approach is being implemented in the upcoming Ethereum 2.0 version.

3. Implement sharding, or splitting the database.

Improving Layer 1 requires a great deal of effort. In many cases, not all network users will agree to such changes. Doing so may lead to community divisions and even hard forks. The 2017 Bitcoin Cash split was a result of a hard fork.

Segregated Witness (SegWit)

Bitcoin's SegWit is an example of a Layer 1 scalability solution. SegWit increases Bitcoin's throughput by changing the organization of block data (removing digital signatures from transaction data). This can free up block space, allowing each block to handle more transactions without compromising network security. SegWit was implemented through a backwards-compatible soft fork. This means that Bitcoin nodes that have not been updated to include SegWit can still process transactions.

What is Layer 1 sharding?

Sharding is a common Layer 1 scaling solution that can increase transaction throughput. It is a database partitioning technology that can be applied to a distributed ledger like blockchain. The network, along with its nodes, is divided into different shards to distribute the workload and improve transaction speed. Each shard processes a portion of the entire network's activity, meaning each shard has its own transactions, nodes, and independent blocks.

After sharding, there is no need for each node to maintain a complete copy of the blockchain. Each node writes completed work to the main chain and shares local data in real-time, including address balances and other critical parameters.

Comparison of Layer 1 and Layer 2

Layer 1 has some inherent bottlenecks that are hard to overcome. Due to technical limitations, it is difficult, if not impossible, for the blockchain mainnet to implement certain changes. For example, Ethereum is in the process of upgrading to a proof-of-stake (PoS) system, but the entire process has taken several years. Because of scalability issues, Layer 1 itself may not be suitable for certain use cases. The transaction process on the Bitcoin network takes too long to operate any blockchain games in reality. However, game developers may still want to leverage the security and decentralization properties of Layer 1. The best approach is to build Layer 2 solutions on this network.

Lightning Network 

Layer 2 solutions are based on Layer 1 and rely on Layer 1 to complete transactions. The Lightning Network is a well-known example. During peak periods, it can take hours to complete a transaction on the Bitcoin network. The Lightning Network allows users to make quick payments using Bitcoin off-chain and later submit balances to the main chain. This can consolidate everyone's transactions into a final record, saving time and resources.

Today's blockchain ecosystem has multiple Layer 1 networks and Layer 2 protocols. While it may be confusing at first, once the basic concepts are understood, the overall architecture becomes clear. When researching new blockchain projects, especially those focused on network interoperability and cross-chain solutions, understanding the basic concepts is very practical.