What Are Layer 1 Blockchains?

What Are Layer 1 Blockchains?

Layer 1 (L1) blockchains are decentralized software protocols that form the core infrastructure for many cryptocurrencies. They establish and enforce the operational rules for crypto projects, setting the standards that computers (nodes) within a cryptocurrency network must follow to securely transmit, verify, and record new transactions on the public payments ledger. An L1’s coding specifications contain all instructions dictating how a cryptocurrency functions.

How Do Layer 1 Blockchains Work in Cryptocurrency?

Layer 1 blockchains require a consensus mechanism to build trust among decentralized node operators. These mechanisms use algorithms to define and enforce the rules for processing crypto payments. For instance, Bitcoin’s blockchain utilizes a proof-of-work (PoW) consensus model, while blockchains like Ethereum and Solana employ a proof-of-stake (PoS) mechanism.

Beyond the consensus algorithm, Layer 1 blockchains integrate additional security measures in their code to ensure process integrity and deter malicious actors. They also manage transaction fees and the issuance schedules for their native cryptocurrencies.

Examples of Layer 1 Blockchains

Notable examples of Layer 1 blockchains include:

• Bitcoin: The first and largest cryptocurrency, leveraging a PoW consensus algorithm.
• Ethereum: Employs PoS consensus following the "Merge" upgrade in 2022.
• Litecoin: Designed as a fast, low-cost P2P digital currency, uses PoW.
• Solana: Recognized for high transaction throughput, uses PoS.
• Cardano: Focuses on peer-reviewed technological research, also uses PoS.

What Are Some Limitations of Layer 1 Protocols?

Despite their critical role, Layer 1 blockchains often lack flexibility. Their algorithms are intentionally deterministic to maintain consistency across the decentralized network, which can hinder innovation and scalability. Vitalik Buterin describes this as the "blockchain trilemma," where developers must sacrifice one of three elements: decentralization, security, or scalability.

Another challenge is limited communication between different blockchain projects, known as the "interoperability problem." This issue makes it difficult or impossible to transfer assets between L1 networks or interact with applications spanning multiple chains.

Layer 1 vs. Layer 2 Protocols: The Key Difference Between Blockchain Layers

While Layer 1 protocols serve as the foundation of cryptocurrency architecture, Layer 2 (L2) protocols are built atop L1s to enhance scalability or introduce new use cases. L2 solutions leverage the security and decentralization of established Layer 1s, offering faster transactions and lower fees. Examples include Arbitrum, Optimism, and Polygon, all of which operate on Ethereum.

Conclusion

Layer 1 blockchains are fundamental to the crypto ecosystem, delivering the secure and decentralized base on which countless innovations are built. While they face ongoing scalability and interoperability challenges, Layer 1 protocols remain essential to the operation and advancement of the digital asset landscape. As technology evolves, solutions like sharding and Layer 2 protocols are being developed to address these limitations, paving the way for a more robust and versatile future for cryptocurrencies.

FAQ

What Are Layer 1 Blockchains?

Layer 1 blockchains are standalone networks that process transactions directly. Examples include Bitcoin and Ethereum. They constitute the foundational layer of blockchain technology.

Is Solana a Layer 1 or Layer 2?

Solana is a Layer 1 (L1) blockchain. It independently executes and validates its own transactions.

What Is the Best Layer 1 Blockchain?

Ethereum is widely regarded as the top Layer 1 blockchain due to its established network and expansive ecosystem. It remains the premier smart contract platform.

How Many Layer 1 Blockchains Exist?

As of 2025, there are approximately 39 Layer 1 blockchains. This figure includes major networks such as Ethereum and Binance Smart Chain, along with more recent projects.