Layer-1 Blockchain

A layer-1 blockchain is a base blockchain that records and finalises transactions on its own network, secured by its own consensus mechanism and usually paid for in its own native coin. Bitcoin, Ethereum and Solana are well-known examples. The term "layer 1" separates these foundational networks from systems built on top of them.

Those higher systems, known as layer 2 networks, handle activity away from the base chain and rely on it for final settlement and security. Beneath layer 1, some projects describe a layer 0 that provides shared infrastructure for many chains. The bitcoin-specific use of the term is covered under layer 1 in the Bitcoin blockchain.

Think of a country's main road network. Every journey eventually uses those roads, and the rules of the road, such as speed limits and who has right of way, apply to everyone. A layer-1 blockchain is that main road network for a cryptocurrency: it is where transactions finally count, and its rules decide what is valid.

When the roads get crowded, there are two broad fixes. One is to widen the roads themselves, which means changing the layer 1. The other is to build express services that gather many passengers into a few vehicles before joining the main road, which is roughly what layer-2 systems do. Both approaches are used, and each has costs.

A layer-1 blockchain bundles several jobs that newer designs sometimes split apart:

• Execution. Running transactions and, on programmable chains, smart contracts, and updating account balances.
• Consensus. Agreeing on the order of transactions and which blocks are final, through methods such as proof of work or proof of stake.
• Data availability. Making sure the data behind each block is published so anyone can check it.
• Settlement. Providing the final record that other systems, including layer 2s and bridges, treat as the truth.

Chains that perform all four jobs themselves are called monolithic. Modular designs hand some jobs to specialised layers, for example rollups for execution and separate networks for data availability.

The security of a layer 1 depends on how costly it is to rewrite its history. On proof-of-work chains, that cost is the computing power and electricity an attacker would need; on proof-of-stake chains, it is the value of tokens an attacker would have to acquire and risk losing. The number and spread of independent nodes and validators also matter, since a network run by a handful of operators is easier to censor or coordinate. Layer 2s and applications inherit these properties, which is why the strength of the base layer underpins everything built above it.

Layer-1 chains also differ in how quickly a transaction becomes final. On Bitcoin, finality is probabilistic: each new block makes reversal less likely, and large payments usually wait for several confirmations. Many proof-of-stake chains offer explicit finality after a set number of blocks or seconds, after which reversing a transaction would require a large share of validators to break the rules and lose their stake.

Layer-1 chains face the blockchain trilemma: increasing throughput tends to cost either security or decentralisation. Approaches include larger or faster blocks, more efficient consensus, parallel transaction processing, and sharding, which splits the network into parts that work simultaneously. Ethereum moved from proof of work to proof of stake in September 2022 and has since focused on making cheap data space for rollups rather than processing most activity itself. Bitcoin changes its base layer very conservatively and relies on systems such as the Lightning Network for faster payments.

Competition between layer 1s centres on fees, speed, developer tools, security and the size of each chain's user base. Many newer networks are compatible with the Ethereum Virtual Machine so that existing applications can move across easily, a theme covered under EVM and non-EVM layer models.

Critics argue that many layer 1s launched since 2017 trade decentralisation for speed, with small validator sets, frequent outages or heavy influence from their founding foundations. Others point out that dozens of competing base chains fragment users and liquidity and push activity onto risky bridges. Supporters reply that competition drives technical progress and that different chains suit different uses. Regulators, for their part, increasingly look at who controls a layer 1, since a chain run by a small group may face questions about whether its native token is a security.