Blockchain is an evolving technology that has many real-world applications, from crypto to supply chain management, NFTs, dApps, and more. As blockchain continues to be a building block for many different industries, scalability is turning into a considerable factor as the technology sees rapid adoption. That's where understanding blockchain's different architectural layers is key. Let's take a look at the layer 1 & layer 2 blockchains – their definitions, how they work, and what their importance is.
Layer 1 & Layer 2 Blockchain
As blockchain technology has revolutionized various industry verticals, it has become increasingly challenging and confusing to understand. Besides, more and more people are showing interest in providing funds in the development of this technology and so the need to overcome its complexity and to understand the blockchain system is paramount. However, the different layers of blockchain not only add up to its complexity but also allow organizations to scale. This scalability warrants us to understand the different layers of blockchain more than ever. This post will decode the layer 1 & layer 2 blockchain, their different types, examples, and key differences between them. Keep scrolling to learn more about layer 1 & layer 2 blockchain.
What Is Layer 1 Blockchain?
Layer 1 blockchains are referred to as the base or foundational blockchains that are responsible for transactions, of course after proper validation. These original blockchains are decentralized networks that use verification techniques like Proof of Work (PoW) and Proof of Stake (PoS) prior to permitting transactions. Layer 1 is responsible for performing core functions like storing data, dispute resolution, consent mechanisms, programming language, carrying out transactions, and others. This blockchain layer is also known as the implementation layer and supports scalability by significantly reducing the energy requirement. One such example is Sharding, which helps in scaling by dividing the computing power.
Examples of Layer 1 Blockchain
Bitcoin: An extremely popular and in-demand blockchain is Bitcoin. It employs a PoW verification process while carrying out peer-to-peer transactions.
Ethereum: Although Ethereum initially started out with the PoW consensus mechanism, it transitioned into a PoS mechanism during transactions. Ethereum is also known for smart contractual functionality.
Polkadot: This blockchain is a multi-chain platform that employs a similar version of PoS to allow different blockchains to interoperate.
What Is Layer 2 Blockchain?
Layer 2 blockchain protocols or frameworks are developed over existing blockchains. This layer 2 invariably becomes an update over layer 1 to resolve all its limitations, pertaining typically to its scalability problems. However, layer 2 depends on layer 1 for its security and verification
process. Layer 2 acts as a second line of defense that processes transactions. This blockchain protocol is ideally suited to the Web 3.0 ecosystem for encouraging mass adaptation while offering better transaction speed without compromising on decentralization. There are many instances, wherein projects employed layer 1 at the start only to incorporate layer 2 without much hassle. Layer 2 increases the speed of transactions and is equipped to process multiple batching transactions.
Examples of Layer 2 Blockchain
Lightning Network: This is one of the prime examples of a layer 2 solution. This solution is created over Bitcoin. It helps users by creating payment links between the participants, allowing off-chain transactions. Lightning Network is effective in reducing transaction charges and boosting their speed.
Polygon: Formerly known as Matic Network, Polygon is another prominent layer 2 solution, which is specifically for Ethereum. By using a mixture of sidechains and plasma chains, Polygon improves the speed of transactions and makes it cheaper.
Optimistic Rollups: This is a layer 2 scaling solution. This solution is developed particularly for Ethereum and helps to improve transactions and minimize gas fees.
Key Differences Between Layer 1 & 2 Blockchain
Layer 1 is a blockchain’s foundation, whereas layer 2 is a blockchain protocol that is built over an existing blockchain. According to scalability, blockchain networks are divided into layers 1 & 2. Layer 1 is the one that adjusts the protocols and processes of the original or base blockchain. Meanwhile, layer 2 performs its transactions of the mainchain using a parallel network that allows for multiple and fast transactions to occur.
Both layer 1 and layer 2 solutions play key roles in today’s decentralized systems, each contributing in its own way to improve transaction efficiency and scalability, ultimately making the user experience smoother and more effective.