Layer-1

What Is a Layer-1 

Layer-1 refers to the foundational blockchain architecture that directly processes and records all transactions in a network, and encompasses the base protocol of the blockchain, including the consensus mechanism, network security, and transaction validation processes. Examples of Layer-1 blockchains include Bitcoin, Ethereum, and Solana, each with its own unique set of protocols and functionalities.

Layer-1 blockchains are responsible for maintaining the decentralized ledger and ensuring the integrity and security of the network. They achieve this through consensus mechanisms such as proof of work (PoW) or proof of stake (PoS). Bitcoin, for instance, uses PoW, where miners compete to solve complex mathematical puzzles to validate transactions and add new blocks to the blockchain. Ethereum, transitioning to Ethereum 2.0, employs PoS, where validators are chosen to create new blocks based on the amount of cryptocurrency they hold and are willing to "stake" as collateral.

Key Features of Layer-1

Execution

Execution in Layer-1 refers to the processing of transactions and smart contracts. This involves transaction execution, where Layer 1 handles the validation and processing of individual transactions, ensuring they adhere to the network’s rules. It also includes the execution of smart contracts, which are self-executing contracts with terms directly written into code, and state management, where the execution layer manages the blockchain’s state, including balances, contract states, and more.

Consensus

Consensus in Layer-1 is the mechanism by which the network agrees on the validity and order of transactions. This involves consensus algorithms, such as Proof of Work (PoW) and Proof of Stake (PoS), which ensure that all nodes in the network agree on the state of the blockchain. It also includes security measures designed to protect the network against attacks and ensure the blockchain’s integrity, as well as maintaining decentralization to prevent any single entity from controlling the network.

Settlement

Settlement in Layer-1 refers to the finalization of transactions, ensuring they are permanently recorded on the blockchain. This includes finality, where transactions are considered final and irreversible once confirmed and included in a block. It also encompasses transaction fees paid by users to incentivize miners or validators to include their transactions in a block, and ledger updating, where the blockchain ledger is updated to reflect the new state after transactions are settled, ensuring all nodes have an up-to-date and consistent view of the blockchain.

Data Availability

Data availability in Layer-1 ensures that the data necessary for the network to function is accessible to all participants. This involves data storage, where Layer 1 stores the full transaction history and state data, making it accessible to all nodes in the network. It also includes transparency, with public blockchains making transaction data available to anyone for auditability, and addressing scalability challenges to ensure data availability as the blockchain grows in size with every new transaction and block added.

Notable Layer-1 Blockchains

Bitcoin

Bitcoin is the first and most well-known cryptocurrency, created by an anonymous person or group known as Satoshi Nakamoto in 2009. It operates on a decentralized peer-to-peer network, allowing users to send and receive bitcoins without the need for intermediaries. Bitcoin uses a Proof-of-Work (PoW) consensus mechanism to secure the network and validate transactions. It is often referred to as digital gold due to its limited supply of 21 million coins and its store-of-value properties.

Ethereum

Ethereum, launched in 2015 by Vitalik Buterin and a team of developers, is a decentralized platform that enables smart contracts and decentralized applications (dApps) to be built and run without any downtime, fraud, or interference from a third party. Ethereum introduced the concept of a blockchain with a Turing-complete virtual machine, the Ethereum Virtual Machine (EVM). It originally used a Proof-of-Work consensus mechanism but has since transitioned to Proof-of-Stake (PoS) with the Ethereum 2.0 upgrade, aiming to improve scalability, security, and sustainability.

Solana

Solana is a high-performance blockchain platform designed to achieve fast transaction speeds without sacrificing decentralization. Launched in 2020 by Anatoly Yakovenko and the Solana Foundation, it can process thousands of transactions per second thanks to its innovative consensus mechanism called Proof of History (PoH), which works in conjunction with Proof of Stake (PoS). Solana aims to provide the scalability needed for decentralized applications and crypto-currencies to operate on a global scale.

Avalanche

Avalanche is a blockchain platform that aims to provide a highly scalable and interoperable ecosystem for decentralized applications and enterprise blockchain deployments. It was developed by Ava Labs and launched in 2020. Avalanche uses a unique consensus protocol called Avalanche consensus, which allows it to achieve high throughput and low latency. The platform supports multiple custom blockchain networks (subnets) and is designed to be highly flexible and secure.

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