In the context of blockchain technology, “Layer 1” refers to the foundational protocol layer of a blockchain network. It is the primary layer responsible for consensus mechanisms, data structure, and security of the blockchain. Layer 1 blockchains are often referred to as “base layer” blockchains.
The main characteristics of a Layer 1 blockchain include:
Consensus Mechanism: Layer 1 blockchains implement their consensus mechanisms directly into their protocol. This mechanism determines how the network agrees on the validity of transactions and the order in which they are added to the blockchain. Examples of Layer 1 consensus mechanisms include Proof of Work (PoW) used by Bitcoin and Proof of Stake (PoS) used by Ethereum 2.0 and other blockchains.
Security: The security of a Layer 1 blockchain is ensured through cryptographic techniques and the consensus mechanism. A robust consensus mechanism, like PoW or PoS, helps prevent malicious attacks and ensures that the majority of network participants are honest.
Data Structure: Layer 1 blockchains define their data structure for storing transactions and blocks. Transactions are grouped into blocks, which are then linked together using cryptographic hashes to form the blockchain.
Smart Contracts: Some Layer 1 blockchains support basic smart contract functionality directly at the protocol level. Smart contracts are self-executing contracts with the terms of the agreement directly written into code, enabling automated and trustless interactions.
Performance and Scalability: Layer 1 blockchains face challenges related to performance and scalability, as every transaction must be processed and validated by the entire network. This can limit the number of transactions per second the blockchain can handle.
Examples of Layer 1 blockchains include:
Bitcoin (BTC): The first and most well-known blockchain, which uses PoW as its consensus mechanism.
Ethereum (ETH): A versatile blockchain that introduced the concept of smart contracts and transitioned from PoW to PoS with the Ethereum 2.0 upgrade.
Cardano (ADA): A blockchain platform that uses PoS and focuses on security, scalability, and sustainability.
Layer 1 blockchains form the foundation of the broader blockchain ecosystem. They provide the core features necessary for secure and decentralized peer-to-peer transactions and serve as a base for the development of Layer 2 solutions and decentralized applications (DApps). Layer 2 solutions are built on top of Layer 1 blockchains to address scalability and transaction throughput issues.