An Overview of Layer-1 Protocol in Blockchain
Layer 1 protocol is the foundation of a blockchain network. It is the base that gave rise to other cryptocurrencies, which are usually launched to solve a problem that the underlying network could not. An example is Polygon, a Layer 2 protocol, created as a scaling solution for Ethereum.
Layer 1 is responsible for managing the network’s transactions and digital assets. Almost all cryptocurrencies fall under one of the two groups: Layer 1s and Layer 2s.
While Layer 1s are coins with their own blockchains, Layer 2s are built on top of Layer 1 blockchains using Smart Contract technology.
Examples of Layer-1 blockchains include Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Elrond (EGLD), Harmony (ONE), IoTex (IOTX), THORChain (RUNE), Algorand (ALGO), Avalanche (AVAX) and more.
Each Layer-1 blockchain is created for different purposes. For instance, Solana and Algorand use Proof of History (PoH) and Proof of Stake (PoS) consensus mechanisms, respectively, to offer reduced fees and quicker transaction speeds. Avalanche blockchain is designed more for chain interoperability.
Bitcoin is intended to be a simple, trustworthy form of payment with enforced scarcity to protect its value. The first widely used blockchain to implement Smart contracts was Ethereum, which also housed the initial wave of dApps and tokens that gave birth to DeFi and web3.
What is a Layer 1 Protocol?
Layer 1 in blockchain refers to the base protocol that defines how the network functions. It is the foundation upon which all other applications are built. Layer 1 is usually designed to be robust and secure, with the primary focus on ensuring that transactions are processed correctly and efficiently.
Layer 1 protocols are often implemented as open-source software, with the code being made available for anyone to review and audit. This helps to ensure that the protocol is secure and maximises trust in the network.
Layer 1 is the Underlying Protocol That Supports Blockchain
Layer 1 in blockchain technology is the foundation upon which the entire system is built. Without a strong foundation, the blockchain would not be able to function properly.
Layer 1 is responsible for a number of things, including (i) Managing the list of all valid transactions (ii)Recording new transactions onto the blockchain (iii)Enforcing the rules of the network (iv) Verifying transactions Layer 1 is critical to the success of any blockchain network.
Layer 1 protocols are typically designed to be scalable and highly customizable, allowing for the development of a wide range of applications on top of them. This makes them an essential part of the blockchain ecosystem and the foundation for many of the innovative applications that are being built on blockchain today.
The Problem With Layer 1
Back in 2009, when Bitcoin (BTC) introduced the idea of blockchain technology to the world, It required the development of a native currency to enable payment for network transactions, which gave rise to well-known cryptocurrencies like BTC.
However, the exponential growth of the blockchain ecosystem exposed some basic issues of slow transaction rates and the inherently limited scalability offered by layer-1 blockchains and decentralisation, which the Ethereum Founder, Vitallik Buterin termed “ The Blockchain Trilemma.”
The inability to scale is one of the biggest issues for Bitcoin and other big blockchains, leading developers to create tokens on the blockchain. Consequently, there has been a higher demand for Layer 2 blockchains as more cryptos scramble to offer solutions and minimise transaction costs that are associated with Layer 1s.
Notwithstanding the underlying issues of Layer-1, it is still the foundation upon which protocols like Layer 2 exist. Layer 1 remains the bedrock and the technology responsible for the bulk of tasks that maintain a blockchain network’s fundamental operations.
Disclaimer: The opinions expressed in this blog are solely those of the writer and not of this platform.