Layer-1 vs. Layer-2 Blockchains: What’s The Distinction?

If you happen to’ve been within the blockchain space for a while, you’ve most likely seen the phrases Layer-1 and Layer-2 used to confer with blockchains – however what do these imply? What are the variations?

These phrases describe basic variations to the construction of a blockchain, and greedy them is essential to growing an understanding of blockchain scalability, safety, and effectivity.

On the lookout for the brief reply? In essence:

• Layer-1 blockchains are huge, main, foundational networks, equivalent to Bitcoin, Ethereum and Solana. They’re the tree trunk, from which all the things else branches from. They’re trusted and safe, however typically additionally cumbersome as they’re designed to be a normal instrument, reasonably than optimised for a particular activity. This implies transaction pace is low, and prices are excessive.
• Layer-2 blockchains are facet networks, constructed on high of Layer-1 blockchains, equivalent to Polygon, Immutable, and Base. They’re the branches, sprouting from the tree trunk. They’re typically specialised for a particular area of interest, e.g. blockchain video games, and course of high-volume transactions away from the principle blockchain, permitting apps to run at pace with out clogging the Layer-1 community. This implies transaction speeds are excessive, prices are low – and as safety is garnered from the Layer-1 it’s branching from, safety continues to be robust.
• Layer-Three blockchains are specialist networks, constructed on high of Layer-2 blockchains. They’re the leaves, sprouting from the branches. These are sometimes reserved for explicit high-volume apps, to forestall transactions from clogging the Layer-2 community. As they’re constructed particularly for one app, this implies transaction speeds are very excessive, and prices are very low.

Wish to dive deeper and study the way it all works? Learn on…

What’s a Layer-1 blockchain?

Layer-1 blockchains are the spine of a decentralized world. They’re answerable for processing and finalizing transactions on the pinnacle of safety and integrity.. A few of the most well-known Layer-1 blockchains embrace Bitcoin (BTC), Ethereum (ETH), and Solana (SOL).

Bitcoin was the primary Layer-1 blockchain. Designed for peer-to-peer transactions, and utilizing a proof-of-work consensus mechanism, it trades pace and quantity for outright safety – that means that while it’s best for securely dealing with a small quantity of necessary transactions, it struggles to scale successfully.

Ethereum expanded on Bitcoin by introducing sensible contracts, enabling the event of decentralized functions (dApps). Nonetheless, the rise of the primary high-volume blockchain-based recreation, CryptoKitties, congested Ethereum to such an extent that the majority of Ethereum’s visitors was devoted solely to supporting the CryptoKitties recreation, sending transaction pace by the ground, and transaction costs by the roof.

This spurned the event of among the first Ethereum Layer-2 blockchains (equivalent to Polygon and Immutable), and new Layer-1 blockchains that aimed to unravel the identical downside, equivalent to Flow.

Many different Layer-1 blockchains have since sprung up, every making an attempt to be a strong spine for additional improvement.

Layer-1’s course of transactions by verifying their authenticity by a community of nodes (particular person units of pc {hardware}), and recording them in blocks. As soon as a block of transactions is verified, it’s added to the blockchain, making the transactions irreversible and safe.

Most Layer-1 blockchains are siloed, that means they can not talk with different Layer-1 networks, although there’s rising curiosity in constructing bridges – instruments which may permit Layer-1 blockchains to speak amongst one another, permitting property to be ship between them.

What’s a Layer-2 blockchain?

Layer-2 blockchains are constructed on high of Layer-1 blockchains to develop their scalability or develop their performance. They typically specialize in a selected area of interest, and intention to dump among the transactional burden from the Layer-1, permitting for quicker and cheaper transactions for high-volume apps.

Polygon is without doubt one of the most well-known Layer-2 options for Ethereum. It makes use of an array of sidechains to course of transactions, that are then batched and finalised onto Ethereum – that means that as an alternative of paying for one costly Ethereum transaction, you’re paying for a small fraction of 1 transaction that’s mixed with many others, making speeds a lot increased and costs a lot decrease.

Immutable – a gaming-focused Layer-2 – furthered Layer-2 know-how by introducing zero-knowledge (ZK) rollups, which – in brief – permit large numbers of transactions to be verified and processed with none drawbacks on safety, offering a brand new stage of scalability to blockchains.

Not like Layer-1 blockchains, as they’re branched from their father or mother chain, many Layer-2 networks can talk with each other, permitting all kinds of apps to share information and work with each other.

What’s a Layer-Three blockchain?

Layer-Three blockchains was stunningly uncommon, however have gotten more and more frequent as apps chase peak optimization.

Layer-Three blockchains are constructed on high of Layer-2 blockchains, and are sometimes constructed to help one explicit app or recreation. This permits that app or recreation to learn from even quicker transactions and even decrease prices.

That is usually finished both in anticipation of an app’s large reputation, or if a Layer-2 app is pushing such a high-volume of transactions that it’s clogging the Layer-2 and affecting different apps on the community.

We’ve written about two Layer-Three blockchains just lately: Anomaly, a Ethereum Layer-Three AI gaming platform; and Arbitrum Orbit, an Ethereum Layer-Three that was the previous house for well-liked web3 MMORPG LumiTerra.

Now that you just perceive the variations between a Layer-1, Layer-2 and Layer-Three blockchain, it is going to be simpler to each perceive and navigate the more and more advanced world of blockchain know-how. Keep in mind: Layer-1s are the trunks, Layer-2s are the branches, and Layer-3s are the leaves!