Layer 1 and layer 2 are terms used to describe the architecture of various blockchains, projects, and development tools. Understanding the different blockchain layers will help you understand the relationship between Polygon and Ethereum or Polkadot and its parachains.
What is layer 1
A layer-1 network is another term for a foundation blockchain. BNB Smart Chain, Ethereum, Bitcoin, and Solana are some of the layer-1 protocols. Layer-1 networks are the primary networks in their ecosystem. Off-chains and other layer-2 solutions are built on top of the main chains, as opposed to layer-1 solutions.
In other words, when a protocol processes and finalizes transactions on its own blockchain, it is layer 1. They also have their own native token, which they use to pay transaction fees.
Scaling for layer 1
A common problem is layer-1 networks’ inability to scale. Transaction processing has been a challenge for Bitcoin and other big blockchains during periods of increased demand. The Proof of Work (PoW) consensus algorithm used by Bitcoin uses a lot of computer power.
Although PoW guarantees decentralization and security, PoW networks also have a tendency to sluggish down when there are too many transactions. As a result, fees go up, and transaction confirmation times lengthen.
Although blockchain engineers have been working on scalability difficulties for some time, there is still substantial dispute about the best options.
- Increasing block size to accommodate more transactions per block.
- Modifying the chosen consensus method, as will be done with the impending Ethereum 2.0 upgrade.
- Making use of sharding. A technique for partitioning databases.
Implementing improvements from Layer 1 takes a lot of work. It’s common for not all network users to accept changes. This might lead to community rifts or perhaps a hard fork, as happened in 2017 when Bitcoin and Bitcoin Cash split.
SegWit
SegWit (segregated witness), a layer-1 scaling solution, is an example. Altering how block data is organized (digital signatures are no longer included in the transaction input) boosted Bitcoin’s performance. The modification increased the amount of room available for transactions in each block without compromising network security. A soft fork that was backward-compatible was used to implement SegWit. This suggests that Bitcoin nodes that have not yet received the necessary updates to implement SegWit can still process transactions.
How does layer-1 sharding work?
A well-liked layer-1 scaling technique for boosting transaction throughput is sharding. The method is a type of database partitioning that can be used with distributed ledgers on blockchains. A network and its nodes are divided into numerous shards in order to disperse the workload and speed up transaction processing. Every shard has its own transactions, nodes, and unique blocks because each one regulates a fraction of the network’s activities.
Thanks to sharding, each node does not need to maintain a complete copy of the entire blockchain. In order to transmit the status of their local data, including addresses’ balances and other important metrics, each node instead reports back the work accomplished to the main chain.
Lightning Network
Solutions at layer 2 rely on layer 1 to complete their transactions and build upon them. The Lightning Network is a well-known illustration. Transaction processing on the Bitcoin network might take hours when there is high demand. Users can send Bitcoin quickly off the main chain using the Lightning Network, and the total balance is afterward reported back to the main chain. As a result, time and resources are saved because all transactions are virtually combined into a single record.
Examples of Layer 1 blockchains
Layer-1 Blockchain technology is not confined to Bitcoin and Ethereum. They include other blockchains that offer a wide range of distinct use cases.
Elrond
Elrond is made to be more scalable and waste less computational resources in order to compete with Ethereum and Bitcoin. Its distinguishing feature is its adaptive state sharding approach, which improves scalability by integrating three types of sharding, as detailed below:
- Network sharding: Controls how nodes are partitioned into shards.
- Transaction sharding: This method maps transactions to shards.
- State sharding: Because the shards only have a partial picture of the state,cross-shard communication occurs during transactions.
BNB
The BNB chain consists of the original Binance Chain, which debuted in 2019, and its improved counterpart, the Binance Smart Chain, which debuted in 2020.
Binance debuted in 2019 with the primary goal of replacing the bad user interface of DEXs with an ultra-fast and decentralized trading solution.
After a successful year, the Binance Chain introduced the Binance Smart Chain to compete with Ethereum and its ability to host DApps.
The Binance Smart Chain works in parallel with the Binance Chain and is compatible with Ethereum, allowing developers to move DApps without difficulty.
Solana
Solana is touted as the first web-scale blockchain network, with 200 nodes and transaction speeds of up to 65,000 TPS (a test net is an alternate blockchain used for testing).
The Proof of History (PoH) mechanism is its key invention. Solana employs cryptographic timestamps to determine the chronology of events, whereas other blockchains rely on other nodes to verify if a transaction occurred.
Consider adding a few drops of color to the water in a container and photographing it at regular intervals.
You’d know how to rearrange these shots if they were jumbled because they’re a function of time.
Each Solana node has a clock, which allows the network to agree on the time and order of events without relying on other nodes for confirmation.
As a result, nodes can validate transactions independently of one another, reducing network traffic and enhancing scalability.
THORChain
Although the fact that DEXs have grown in popularity, it is still not viable to exchange tokens across various blockchains.
Bitcoiners, for example, cannot trade BTC on Ethereum, Ethereum can only trade ERC-20 tokens on Ethereum’s DEXs, and Solana DEXs only handle SOL tokens.
The list goes on and on. There are peer-to-peer exchanges, like Bisq, that allow you to swap Bitcoin for other cryptocurrencies or fiat currencies. Still, they lack the transaction volume to be considered a mainstream solution.
Then there’s THORchain.
THORchain is a cross-chain DEX that allows you to exchange one digital asset for another on a different chain.
It functions similarly to DEXs like Uniswap, but the THORchain also has another element known as THORNodes, which are liquidity providers who deposit their tokens in pools and traders. (servers or clusters of servers).
These THORNodes include a THORChain node as well as a node for each supported chain.
If a user wishes to exchange ETH for BTC, the Ethereum nodes will identify and agree that the ETH vault has received the ETH. Then, to complete the exchange, these nodes collectively sign the BTC transaction from the Bitcoin nodes.
Kava
Kava is a unique co-chain design that blends Cosmos SDK interoperability with the flexibility and speed of Ethereum smart contracts.
The end result is a highly scalable and secure blockchain that connects to the Cosmos ecosystem’s 30 chains, as well as an Ethereum-compatible environment that allows developers to deploy programs on both Cosmos and Ethereum.
Furthermore, all transactions are ultra-fast and secure, thanks to Tendermint’s consensus engine and its ability to reach block finality, which ensures that a transaction cannot be altered.
IoTeX
IoTeX is a layer 1 blockchain network founded in 2017 that focuses on blockchain integration with IoT. It enables users to control their data, ensuring secure ownership and privacy. MachineFi allows users to earn digital assets from real-world data. Notable IoTeX hardware includes Ucam, a privacy-centric home security camera, and Pebble Tracker, a smart GPS device with environmental data tracking.
IoTeX offers layer 2 protocols for customized networks and interoperability. Developers can create sub-chains tailored to IoT device needs. IOTX, the native cryptocurrency of IoTeX, is utilized for network validation, governance, staking, and transaction fees. The platform aims to combine blockchain and IoT, empowering users with control over their data. It provides hardware and software solutions for privacy and data control without compromising user experience. IoTeX’s vision is to create a decentralized ecosystem for machine-backed DApps, assets, and services.
Closing thoughts
To address the blockchain trilemma, the blockchain ecosystem has created a number of Layer-1 and Layer-2 solutions.
Most Layer-1 scaling solutions have a negative influence on blockchains by disturbing the balance between decentralization and security.
Layer-2 solutions, on the other hand, build on top of an existing Layer-1 solution to boost scalability while maintaining decentralization and security.
While Layer-2 solutions are superior in this regard, Layer-1 blockchains are not obsolete. There are numerous promising Layer-1s that have efficiently tackled scalability and made significant advances in decentralized finance.
Conclusion
The term “layer 1 blockchain” refers to the primary layer or base layer of a blockchain network. It is the fundamental layer that handles core functionalities such as consensus, transaction validation, and maintaining the ledger of the blockchain. Layer 1 blockchains are responsible for ensuring the security, decentralization, and immutability of the network. IoTeX is an example of a layer 1 blockchain that focuses on integrating blockchain technology with the Internet of Things (IoT).
FAQs
Q. What is the main function of a layer 1 blockchain?
A. The main function of a layer 1 blockchain is to provide the foundational layer for a blockchain network. It handles tasks such as consensus mechanisms, transaction validation, and maintaining the integrity of the blockchain ledger.
Q. How does a layer 1 blockchain ensure security and decentralization?
A. A layer 1 blockchain ensures security and decentralization by utilizing consensus mechanisms that involve multiple nodes or validators in the network. These mechanisms ensure that transactions are validated and added to the blockchain in a secure and decentralized manner, making it difficult for malicious actors to manipulate the system.
Q. What are the advantages of using a layer 1 blockchain for IoT integration?
A. Using a layer 1 blockchain for IoT integration offers several advantages. It enables secure and private data ownership and control for IoT device users. It also provides a scalable and interoperable infrastructure for IoT applications, allowing for customized sub-chains that meet specific device requirements. Additionally, the integration of blockchain with IoT can enhance data integrity, trust, and transparency in IoT networks.
Q. How does IoTeX contribute to the IoT ecosystem?
A. IoTeX aims to create a decentralized ecosystem for IoT by integrating blockchain technology. It provides privacy-centric solutions, hardware products like Ucam and Pebble Tracker, and a native cryptocurrency (IOTX) for transaction fees and network governance. IoTeX focuses on empowering users with control over their data, fostering secure and scalable interactions between IoT devices and users.
