Layer 1

Layer 1 refers to the foundational blockchain network that serves as the infrastructure for decentralized applications (dApps) and Layer 2 solutions. It directly manages core blockchain functions such as transaction validation, consensus, data availability, and execution of smart contracts. Prominent examples of Layer 1 blockchains include Ethereum, Bitcoin, Solana, and Binance Smart Chain (BSC).

Layer 1 blockchains are designed to maintain decentralization and security while serving as the base layer for the broader blockchain ecosystem. However, because they integrate all these functions within a single layer, they often encounter scalability challenges. As demand grows, transaction processing times slow, and fees increase due to network congestion. These limitations have driven the rise of Layer 2 solutions like Optimistic Rollups and zk-Rollups, which work on top of Layer 1 to enhance scalability without compromising security.

Layer 1 Characteristics by Blockchain

1. Bitcoin: Bitcoin exemplifies the traditional Layer 1 model, focusing on secure, decentralized peer-to-peer payments. While highly secure and decentralized, Bitcoin lacks the programmability of blockchains like Ethereum, limiting its ability to support dApps or complex smart contracts.
2. Ethereum: Initially a monolithic blockchain, Ethereum is transitioning toward a modular design with Layer 2 rollups for scalability and planned upgrades like Danksharding to enhance data availability. It remains the go-to Layer 1 for smart contracts and dApps.
3. Solana: Solana integrates consensus, execution, and data availability into a single monolithic layer. Its high-performance design, powered by Proof of History (PoH), delivers high transaction throughput and low latency. However, this approach can centralize the network as hardware requirements increase with demand.
4. Binance Smart Chain (BSC): BSC achieves high transaction throughput and low fees but does so by sacrificing decentralization. It operates with fewer validators compared to Ethereum or Bitcoin, which raises concerns about its ability to maintain censorship resistance and trustless security.

Key Features

• Core Infrastructure: Handles all fundamental blockchain functions, including consensus, data availability, and execution, providing the base layer for Layer 2 and dApps.
• Security and Decentralization: Ensures the integrity and trustworthiness of the network through a distributed set of validators or miners.
• Scalability Challenges: Faces congestion, slower transaction speeds, and higher fees during periods of high demand.
• Upgradeability: Some Layer 1s, like Ethereum, implement upgrades to address scalability and improve efficiency.

Key Differences from Layer 2

• Direct Management: Layer 1 handles transaction validation and execution natively, while Layer 2 builds on top of it to offload computation and improve scalability.
• Security Foundation: Layer 1 provides the base-level security and consensus, while Layer 2 solutions inherit and extend these guarantees.