If you already know about blockchain scalability, you should also be familiar with Layer 1 blockchains. Let’s explore layer 1 blockchain to understand what it is and why it is so important. In response to any technological advancement, the blockchain ecosystem is growing at a rate never before seen. Blockchain is undergoing constant innovation, with new applications, concepts, and solutions emerging every day.
The number of cryptocurrencies and blockchain networks doubled from a decade ago to several today. However, the implementation and expansion of blockchain networks depend greatly on their scalability. At this point, layer 1blockchain solutions are necessary. What is layer 1 in blockchain? How are these different from general blockchains? In the following post, we will learn about the basic concepts of blockchain layer 1.
What Is a Layer 1 in Blockchain?
Layer-1 blockchains provide solutions for making the overall system more scalable by improving the base protocol. Sharding and consensus protocol changes are two of the most common layer-1 solutions. Projects like Ethereum are implementing new consensus protocols such as proof-of-stake in place of older, more energy-inefficient protocols like proof-of-work (PoW).
As a layer-1 scalability method, shredding is also very popular. In sharding, data is broken up into smaller sets or ‘shards’ that can be processed simultaneously by a network rather than sequentially. Layer-1 solutions have the advantage of requiring no additions to existing infrastructure.
How does it work?
By directly changing the protocol rules, Layer-1 solutions increase throughput and speed while allowing for more applications, projects, and user activities. Scaling on the Layer-1 level can mean, for example, increasing the number of nodes contained in each block or accelerating the confirmation rate of blocks to improve network performance. It’s generally possible to implement Layer 1 solutions. It’s usually possible to implement Layer 1 solutions using either proof of stake, proof of work, or sharding.
● Large chains like Bitcoin and ETH have traditionally used Proof-of-Work, or PoW, as a consensus mechanism.
● It excels in decentralization and security through the use of miners to decode cryptographic algorithms. For the other two to work, PoW has to give up scalability. Moreover, it is very slow and utilizes many resources, especially computing power.
● The Proof-of-Stake consensus process allows for a distributed “stake” over a network. The user’s stake or the number of tokens is used to authenticate block transactions. The strength of PoS lies in its scalability and transaction speed, but it has weaknesses in its security. To increase flexibility, decentralization, and accommodate the growing number of transactions on its chain, Ethereum is moving to a PoW consensus model. Several newer blockchain networks are relying on PoS over Layer-1 chains in order to gain speed and faster adoption.
● A sharding solution uses distributed databases to offer Layer 1 solutions. When the blockchain is broken into smaller pieces called “shards,” it becomes more scalable. Network nodes are assigned to a specific shard rather than keeping a copy of the entire blockchain; doing so allows for reallocation of processing power, which helps to speed up transactions.
Types of layer 1 Blockchain Solutions
Layer 1 blockchain protocols have three most important characteristics: they are decentralized, secure, and scalable. Different approaches can improve the scalability of layer 1 blockchain networks. The following are examples of layer 1 blockchains based on how they approach scalability.
- Consensus Protocol
Switching consensus mechanisms would naturally fall under the first category of layer 1 blockchain solution. The consensus mechanism in conventional blockchain networks is Proof of Work, a resource-intensive and slow process. Proof of work allows for decentralized consensus and security through cryptography, but it has significant limitations for scalability. As the consensus mechanism, a layer 1 blockchain protocol could instead use Proof of Stake.
You can achieve decentralized consensus on blockchains and verify block transactions by using Proof of Stake. However, Proof of Stake provides better transaction speed but less security. Hence, layer 1 blockchain improvements are needed to address the scalability concerns while ensuring security.
- Sharding
In addition, among the top features of layer 1 blockchains is the possibility of Sharding. You can use it to implement distributed ledger technology in the blockchain, primarily used for database partitioning. In terms of increasing transaction throughput, layer 1 scaling methods such as sharding are reliable. At the moment, Sharding in the blockchain space is still viewed as an experimental concept.
Sharding is breaking down a network into separate database blocks, also known as shards. By dividing the network and its nodes, the workload is distributed effectively, improving transaction speeds. Each shard of a layer 1 blockchain would manage a subset of the overall network’s activity. Because of this, each shard has its transactions, blocks, and nodes.
In layer 1 blockchain examples, Sharding reduces the need for every node to possess a complete copy of the entire blockchain. By contrast, nodes report work completed to account for the main chain and information about local data, such as address balances.
Benefits of Layer 1 Blockchain Solutions
Scalability is the greatest attribute of layer 1 blockchains. Scalability is achieved by modifying the base protocol in layer 1 blockchain solutions. By using layer 1 blockchain solutions, you can maintain the blockchain technology’s core value propositions. With layer 1 blockchain protocol, decentralization and security are enabled at high speeds and at an affordable price.
An important feature of layer 1 blockchain solutions is their potential to enhance ecosystems. As technology advances, new tools, and other changes to the base protocols, Layer 1 scaling solutions can accommodate these changes. Thus, layer 1 calling solutions can form the basis for innovative developments in the broader blockchain ecosystem.
Next, selecting the right blockchain is a significant advantage of layer 1 blockchain entries. Your blockchain-based project’s scope and use cases will determine which layer 1 blockchain solutions should be adopted to increase scalability.
Layer 1 Blockchain Examples
After a detailed explanation of layer 1 blockchain basics and an outline of their functionality and benefits, let’s look at some real-world examples. You must see examples of layer 1 solutions in practice and understand how they fit into the ecosystem. Each layer 1 network has approached the problem of blockchain scalability differently. Below are a few notable layer 1 blockchain examples.
- Elrond
A layer 1 blockchain list includes Elrond among the top names, despite its existence since 2018. Sharding enhances performance and scalability in layer 1 blockchains. Elrond’s blockchain provides scalability and a throughput of over 100,000 transactions per second. Secure Proof of Stake consensus is used on layer 1 blockchains along with adaptive state sharding.
The Elrond network uses Sharding to improve performance and scalability. It was founded in 2018 and used layer-1 technology. The Elrond blockchain supports transactions at more than 100,000 per second on the Elrond blockchain. There are two primary features of this protocol: Adaptive State Sharding and Proof of Stake.
By shard splitting and merging as users leave or join the network, adaptive state sharding is achieved. In addition to its state and transactions, the entire architecture of the network is sharded. By moving between shards, validators reduce the possibility of a malicious takeover of shards.
Elrond uses its native token EGLD for transaction fees and DApp deployment and rewards users participating in the network’s validation process. Additionally, Elrond is certified as Carbon Negative since it offsets more CO2 than the PoS mechanism.
- Harmony
A layer 1 blockchain like Harmony offers Proof of Stake consensus and sharding, making it the next top example. For the Harmony blockchain, there are four shards. Different block heights are possible because all shards create and verify blocks simultaneously at their speeds. For now, the blockchain is attracting users and developers via cross-chain finance. Harmony’s vision focuses on zero-knowledge proofs and centralized autonomous organizations or DAOs as the most important part of its blockchain scalability model.
Sharding is supported by Harmony’s Effective Proof of Stake (EPoS) network. Each shard can have different block heights since each one operates at a different speed.
The current strategy Harmony uses to attract users and developers is “cross-chain finance”. A key role is played by trustless bridges between Ethereum (ETH) and Bitcoin, enabling users to exchange tokens without the usual custody risks. In order to scale We3, we use Decentralized Autonomous Organizations (DAO) and Zero-Knowledge Proofs (ZKPs).
Multi-chain and cross-chain opportunities seem to be the future of DeFi (Decentralized Finance), making Harmony’s bridging services popular. We will be focusing on NFT infrastructure, DAO tooling, and interprotocol connectivity.
For network transactions, the company uses its native token, ONE. As well as participating in Harmony’s governance and consensus mechanism, it is also stackable. Successful validators receive block rewards and transaction fees as a result.
- Kava
The name of Kava would be another notable highlight in layer 1 blockchain networks. Layer 1 blockchain is the fastest and most interoperable cosmos blockchain, and Ethereum provides developer support. Besides offering blockchain for EVM environments, it offers a Cosmos SDK development environment. To enhance the scalability of applications on the EVM co-chain, Kava utilizes the Tendermint Proof of Stake consensus mechanism. The Kava network also offers open, on-chain developer incentives to reward top projects within each co-chain through the Kava DAO.
Kaba is a layer-one blockchain that combines Cosmos’ speed and interoperability with Ethereum’s developer support.
The Kava Network makes use of a “co-chain” architecture to provide a unique blockchain for the Cosmos SDK and EVM. Developers can deploy decentralized applications on co-chains such as Cosmos and Ethereum that can interoperate seamlessly.
Using the TendermintPoS consensus mechanism, Kava provides applications on the EVM co-chain with powerful scalability. In addition, Kava Network offers incentives to recognize the top 100 project co-chains based on their usage. KavaDAO funds these incentives.
USDX is a US-Dollar pegged stablecoin. Kawa has a native utility token and governance. Validators stake KAVA to generate network consensus in addition to paying transaction fees. KAVA stakeholders can delegate KAVA emissions to validators and earn a share of their emissions. Also, stakeholder and validator votes are taken on governance proposals that influence the parameters of the network.
- IoTeX
IoTeX, established in 2017, combines blockchain technology with the Internet of Things in a layer 1 network. A machine-backed DApp, asset, and service allow users to control the data that their devices generate. Managing personal information utilizing blockchain technology allows you to secure your personal information.
IoTeX allows people to manage their data and privacy without compromising their experience by combining hardware and software. Users of The Machine earn digital assets through the use of real-world data.
Pebble Tracker and Ucam are two hardware devices released by IoTeX.
Home security cameras like Ucam allow users to monitor their homes anywhere. Track-and-trace capabilities and 4G support make Pebble Tracker a smart GPS. In addition to GPS data, the app tracks environmental data such as temperature, humidity, and air quality in real-time.
In Consideringblockchain architecture, IoTeX utilizes layer two protocols. Customized networks can be created using blockchain tools that utilize IoTeX for finalization. IoTeX makes it possible for these chains to interact and share data. A new sub-chain can then easily be created to address the specific requirements of their IoT device. Transaction fees, staking, network governance, and network validation are all handled by IOTX, the company’s cryptocurrency.
- Celo
A layer 1 network forked from Geth (Go Ethereum), Celo was founded in 2017. In addition to PoS, it has also implemented a unique address system. The Celo Web3 ecosystem has confirmed more than 100 million transactions, including DeFi, NFTs, and payment solutions. A public key can be created on Celo by anyone by using their phone number or email address. Standard computers can run the blockchain without any special hardware.
CELO is a standard utility token designed for transactions, security, and rewards (cello’s main utility token). As stablecoins of Celo offers cUSD, cEUR, and cREAL. Users generate these, and their pegs are maintained through a similar mechanism as MakerDAO’s DAI. You can also buy Celostablecoin with any other Celo asset. Through CELO’s address system and stablecoin, crypto will become more accessible and widely adopted. Many newcomers are discouraged by the volatility of the crypto market and the difficulty of getting started.
- THORChain
THORChain is a permissionless, cross-chain decentralized exchange (DEX). The network was built using the Cosmos SDK. The consensus mechanism used is Tendermint. THORChain removes the need for pegs and wrappings to facilitate decentralized cross-chain liquidity. Multi-chain investors are exposed to greater risk when pegging and wrapping occur.
In THORChain manages deposits and withdrawals as a vault manager. Decentralized liquidity will be created, and there will be no centralized intermediaries. In addition to paying transaction fees, the native token, RUNE, is responsible for governance, validity, and security.
AMM allows you to exchange RUNE for any asset supported by THORChain. It acts as a base pair in AMM. It functions like a cross-chain Uniswap, with RUNE as a liquidity pool security asset.
- Layer-2
Layer-2 blockchain solutions enable greater scalability and operational efficiency over Layer-1 blockchain protocols. It enables a section of Layer-1 transaction functionality to be moved from one network to another, handling the transaction processing requirements and passing the transaction through the blockchain for processing and finalization. Blockchains become less congested and more scalable by moving a large portion of processing power to an external network.
Polygon and Ethereum are good examples. For Ethereum-compatible blockchains, Polygon provides a layer-2 interoperability solution. The Polygon platform allows users to store Ethereum tokens in a smart contract, manipulate them there, and then withdraw their value from the Ethereum network.
Lightning Network is another Layer-2 solution offered by Bitcoin. It was created to improve bitcoin network transaction speeds. Additional Layer-2 solutions exist such as:
- Nested blockchains
This kind of blockchain sits on top of another. It is possible for a primary chain to specify conditions that will assign tasks to nested chains in order to complete the task before returning it to the primary chain. Consequently, the primary chain processes less work and scales more efficiently.
- State channels
A state channel enables interoperation between a blockchain and an off-chain channel, improving transaction speed and capacity. It typically deploys its solutions via blockchain and off-ramp channels by using smart contracts and multi signatures (multisig). After completing the transaction via the state channel, it will be sent over to the blockchain so that it can be recorded. An example of a state channel is Bitcoin Lightning and Ethereum’s Raiden Network.
- Sidechains
A sidechain, usually used for large transactions, consists of a network that sits “side by side” with the blockchain (thus its name). Aside from that, sidechains use their own scalability and speed-optimized consensus mechanism. In this case, the primary blockchain is primarily responsible for ensuring overall security, whereas the sidechain increases transaction processing speed. Sidechains maintain public records on their ledgers as opposed to state channels, so any security breaches on the sidechain will not affect the primary chain.
Final Words
Examples of layer 1 blockchains and their fundamentals demonstrate how layer 1 improves scalability. The use of blockchain in different industries and for many real-life applications is steadily expanding. A new wave of change can be sparked by changes in the base protocol of layer 1 blockchain networks. Due to scalability challenges, blockchain networks face scalability challenges.
Developers should be able to develop a decentralized and secure blockchain network without compromising scalability. Layer 1 scaling solutions allow communities to develop differently, in addition to improving throughput. Layer 1 blockchain solutions face the greatest challenge due to their limited awareness. Find out more about layer 1 solutions for blockchain scalability now.
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