Layer 1 refers to a base network, such as Bitcoin, BNB Chain, or ETHereum, and its underlying infrastructure in crypto. Layer-1 blockchains can validate and finalize transactions without the need for another network. Making improvements to the scalability of layer-1 networks is difficult, as we’ve seen with Bitcoin. As a solution, developers create layer-2 protocols that rely on the layer-1 network for security and consensus. Bitcoin's Lightning Network is one example of a layer-2 protocol. It allows users to make transactions freely before recording them into the main chain.
What is layer 1?
A layer-1 network is another name for a base blockchain. BNB Smart Chain(BNB), ETHereum(ETH), Bitcoin(BTC), and Solanaare all layer-1 protocols. We refer to them as layer-1 because these are the main networks within their ecosystem. In contrast to layer-1, we have off-chains and other layer-2 solutions that are built on top of the main chains.
In other words, a protocol is layer 1 when it processes and finalizes transactions on its own blockchain. They also have their own native token, used to pay for transaction fees.
Layer 1 blockchain examples
Now that we know what layer 1 is, let's look at some examples. There's a huge variety of layer-1 blockchains, and many support unique use cases. It's not all Bitcoin and ETHereum, and each network has different solutions to the blockchain technology trilemma of decentralization, security, and scalability.
Elrond
Elrondis a layer-1 network founded in 2018 that uses sharding to improve its performance and scalability. The Elrond blockchain can process over 100,000 transactions per second (TPS). Its two unique main features are its Secure Proof of Stake (SPoS) consensus protocol and Adaptive State Sharding.
Adaptive State Sharding happens via shard splits and merges as the network loses or gains users. The network's whole architecture is sharded, including its state and transactions. Validators also move between shards, reducing the chance of a malicious takeover of a shard.
Elrond's native token EGLD is used for transaction fees, deploying DApps, and rewarding users that participate in the network's validation mechanism. Also, the Elrond network is certified Carbon Negative, as it offsets more CO2 than its PoS mechanism is accountable for.
Harmony
Harmonyis an Effective Proof of Stake (EPoS), layer-1 network with sharding support. The blockchain's mainnet has four shards, each creating and verifying new blocks in parallel. A shard can do this at its own speed, meaning they can all have different block heights.a
Harmony currently uses a "Cross-Chain Finance" strategy to attract developers and users. Trustless bridges to ETHereum (ETH) and Bitcoin play a key role, allowing users to exchange their tokens without the usual custodial risks seen with bridges. Harmony’s main vision for scaling Web3 relies on Decentralized Autonomous Organizations (DAOs) and zero-knowledge proofs.
The future of DeFi (Decentralized Finance) seems set on multi-chain and cross-chain opportunities, making Harmony's bridging services attractive to users. NFT infrastructure, DAO tooling, and inter-protocol bridges are the major areas of focus.
Its native token, ONE, is used to pay network transaction fees. It can also be staked to participate in Harmony's consensus mechanism and governance. This provides successful validators with block rewards and transaction fees.
Celo
Celois a layer 1 network forked from Go ETHereum (Geth) in 2017. It has, however, made some significant changes, including implementing PoS and a unique address system. The Celo Web3 ecosystem includes DeFi, NFTs, and payment solutions, with more than 100 million transactions confirmed. On Celo, anyone can use a phone number or email address as a public key. The blockchain is easily run with standard computers and doesn't require special hardware.
Celo’s main token is CELO, a standard utility token for transactions, security, and rewards. The Celo network also has cUSD, cEUR, and cREAL as stablecoins. These are generated by users, and their pegs are maintained by a mechanism similar to MakerDAO’s DAI. Also, transactions made with Celo stablecoins can be paid with any other Celo asset.
CELO’s address system and stablecoin aim to make crypto more accessible and improve adoption. The volatility of the crypto market and difficulty for newcomers can be discouraging to many.
THORChain
THORChainis a cross-chain permissionless decentralized exchange (DEX). It’s a layer-1 network built using the Cosmos SDK. It also uses the Tendermintconsensus mechanism for validating transactions. The main goal of THORChain is to allow for decentralized cross-chain liquidity without the need to peg or wrapassets. For multi-chain investors, pegging and wrapping add additional riskto the process.
In effect, THORChain acts as a vault manager that monitors deposits and withdrawals. This helps create decentralized liquidity and removes centralized intermediaries. RUNE is THORChain's native token, used for paying transaction fees and also in governance, security, and validation.
THORChain's Automated Market Maker(AMM) model uses RUNE acting as the base pair, meaning you can swap RUNE for any other supported asset. In a way, the project works like a cross-chain Uniswap, with RUNE being a settlement and security asset for liquidity pools.
Kava
Kavais a layer-1 blockchain that combines the speed and interoperability of Cosmos with the developer support of ETHereum. Using a “co-chain” architecture, the Kava Network features a distinct blockchain for both the EVM and Cosmos SDK development environments. Coupled with IBC support on the Cosmos co-chain, this enables developers to deploy decentralized applications that interoperate seamlessly between the Cosmos and Ethereum ecosystems.
Kava uses the Tendermint PoS consensus mechanism, providing powerful scalability to the applications on the EVM co-chain. Funded by the KavaDAO, the Kava Network also features open, on-chain developer incentives designed to reward the top 100 projects on each co-chain based on usage.
Kava has a native utility and governance token, KAVA, and a US-dollar pegged stablecoin, USDX. KAVA is used to pay for transaction fees and is staked by validators to generate network consensus. Users can delegate their staked KAVA to validators to earn a share of KAVA emissions. Stakers and validators can also vote on governance proposals that dictate the parameters of the network.
IoTeX
IoTeXis a layer 1 network founded in 2017 with a focus on combining blockchain with the Internet of Things. This gives users control over the data their devices generate, allowing for “machine-backed DApps, assets, and services”. Your personal information has value and managing it via blockchain guarantees secure ownership.
IoTeX’s combination of hardware and software provides a new solution for people to control their privacy and data without sacrificing user experience. The system that enables users to earn digital assets from their real-world data is called MachineFi.
IoTeX released two notable hardware products known as Ucam and Pebble Tracker. Ucam is an advanced home security camera that allows users to monitor their homes from anywhere and with complete privacy. Pebble Tracker is a smart GPS with 4G support and track-and-trace capabilities. It not only tracks GPS data, but also environmental data in real time, including temperature, humidity, and air quality.
In terms of blockchain architecture, IoTeX has a number of layer 2 protocols built on top of it. The blockchain provides tools to create customized networks that use IoTeX for finalization. These chains can also interact with one another and share information via IoTeX. Developers can then easily create a new sub-chain to meet the specific needs of their IoT device. IoTeX’s coin, IOTX, is used for transaction fees, staking, governance, and network validation.
Closing thoughts
Today’s blockchain ecosystem has several layer-1 networks and layer-2 protocols. It’s easy to get confused, but as soon as you grasp the basic concepts, it becomes easier to understand the overall structure and architecture. This knowledge can be useful when studying new blockchain projects, especially when they focus on network interoperability and cross-chain solutions. Hope this article may help you know more about layer 1 in this crypto world.
