Layer 1 networks underpin blockchains. In Ethereum, Bitcoin, and Solana, the “mainnet,” sets ecosystem rules and verifies and finalizes transactions.
With few exceptions, Layer 1 blockchains emphasize decentralization and security, which are necessary to any strong network and maintained by a global network of developers and validators.
These platforms have no central authority or supervision, thus the technology must be secure to protect users from fraud and attack. This design focus and the vast resources required to manage a fully operational ecosystem have often prevented scaling.
Some developers feel the Blockchain Trilemma—the difficulty to reconcile security, decentralization, and scalability—is an intractable issue, while layer 2 solutions like Ethereum rollups and Bitcoin’s lightning network may assist.
Layer 2 off-chain solutions (separate blockchains) on layer 1 decrease size and data limits. If every order had to be made by one person before being validated and delivered, it would be sluggish and could only fulfill a few orders per hour, like a restaurant kitchen. Layer 2 prep stations—cleaning, chopping, cooking, and dish assembly—may focus and function better. A last person may check each dish against the order before serving it when the time is right.
Visa operates similarly. Visa batches thousands of daily micro transactions from Starbucks to settle in the banking system at regular intervals instead than processing them individually, which would load the network in minutes. Banks’ internal settlement layer stores and classifies transactions. Visa is layer 2, while the government and organizations that record transactions and establish financial sector norms are layer 1.
Ethereum uses optimistic and ZK rollups to alleviate transaction management and boost transaction inclusion and throughput. User experience is more smooth and practical. Optimism, Loopring, Arbitrum, and zkSync are Ethereum layer 2s.
Ethereum’s layer 1, or mainnet, is decentralized and secure, but market attractiveness has expanded it to 1.5 million daily transactions. Since the mainnet can only process 15 transactions per second, network activity usually generates data congestion.
Layer 2 adds Ethereum to layer 1 to solve these issues. Smart contracts leveraging Ethereum’s decentralized security enable it to interact and unload the mainnet’s large transaction load. Security, data availability, and decentralization are Layer 1 features.
Combining many off-chain transactions into a layer 1 transaction reduces data load and expenses in Layer 2. Mainnet transactions are settled by them for security and decentralization.
Layer 2 efforts may boost user experience and application growth with more transactions per second and lower rates.