Layer 1 is like a plain pizza base forming the base for various innovations in the Web3 world.
Solana, Ethereum, Bitcoin — are all layer 1. On top of these, people build layer 2 solutions to improve their functionalities. For instance, Polygon is a layer 2 scaling solution built on top of Ethereum. Polygon makes Ethereum fast and would not exist without its pizza base, here Ethereum.
Another way to identify layer 1 is when a protocol process and finalize transactions on its own blockchain and the payment is done with its native tokens.
Why do we need layer 2?
As they say, necessity is the mother of invention. Every problem cannot be solved on layer 1 because of various limitations including technology constraints, difficulty in making changes on the main blockchain, etc.
With layer-2 solutions, the transactions have to be only finalised by layer 1 but can be processed off-chain. This is what happens in the case of Lightning Network. Given the high traffic on the Bitcoin network, it can take hours to process transactions. However, in the case of The Lightning Network, faster payments can made by doing them off the main chain and then reporting the final balance to the main blockchain. Essentially, saving time and resources.
That’s all from L for Layer 1. If you recall any other Web3 terms starting from the letter L, please leave a comment and I will include them in later editions.
Two updates:
We have skipped the letter K in the series because it’s a tough one. If you know any Web3 concepts starting from the letter K, please do write back.
Also, I have decided to move to a fortnightly schedule, which is one edition every 15 days. Weekly dispatch is becoming hard to keep up with.
Until next time!