I’ll start with a confession. The first time I paid $180 in gas fees to move a $60 NFT on Ethereum, I only thought, “Wow! This is so cooked!” That was the moment when a Layer 1 blockchain failed for me, making me give a second thought to my investment choices. This was a long time back, and the crypto has come a long way since then.
The continuous slowdown of Layer 1 blockchains has helped developers to come up with another solution, much faster and with much lower gas fees. This was Layer 2 blockchains, which emerged as the most important element of the crypto stack.
We often come across people within the crypto community treating Layer 2 blockchains as a nice-to-have, clever accessory, rather than a crucial component for their performance upgrade. However, this negligence should be considered outdated.
Layer 2 exists because Layer 1 is not designed to scale for a global demand without compromising its own commitments. Layer 2 is not a patchwork for Layer1, but an admission of physics. Something that can make Layer 1 work fine without looking like a villain.
In this article, we will rewind carefully and have a good look at what Layer 2s exist, what they actually fix, and why they may matter more than Layer 1s for real-world adoption.
What Is a Layer 1 Blockchain?
A Layer 1 blockchain is the base settlement layer. A network where ‘the truth’ is decided. As a foundation ledger, it validates transactions, produces blocks, and enforces security. It’s like when Bitcoin says you sent 0.1 BTC, or Ethereum states that an NFT is traded, this is finalized on Layer 1. When this happens, every node agrees, and rules are enforced at the protocol level. There are no shortcuts.
So, Layer 1 does the three main things: maintaining consensus, securing the network, and recording the final state of transactions. They are designed for security and decentralizationa and so speed is their last characteristic and not their flaw.
Popular List of Layer 1 Blockchains in the Crypto Ecosystem
Although every blockchain is unique in its own way, and it is difficult to pick the best Layer 1 blockchain, some of the most well-known and accessed Layer 1s include:
- Bitcoin – Optimized for security and monetary finality, it is a stubborn minimalism.
- Ethereum – The programmable settlement layer, it is expressive and modular.
- Solana – High throughput with monolithic design, it works on one motiveL speed-at-all-cost.
These and others like Avalanche, Cardano, and BNB, etc. are like different digital philosophies frozen and secured through coding.
Problems With Layer 1 Blockchains
Let’s talk about mass usage. Layer 1s sound great until you try to use them like normal money. I once attempted to pay for a simple service using Ethereum during peak hours. The transaction took minutes to confirm, the fee kept changing, and the merchant eventually gave up. That’s when it hit me: a system that works for settlement doesn’t automatically work for day-to-day payments.
What I learned, Layer 1s do not care about user experience, but they are more focused on consensus. The core issues lie in –
- Limited throughput: A Layer 1 blockchain can only process a small number of transactions at a time. It is like a narrow road with limited lanes. Bitcoin can handle about 7 transactions per second, and Ethereum about 15 – 30. When too many people try to use it at once, everything jams and slows down because there’s no more space.
- Fee volatility: Everyone wants to get quicker transactions. However, when demand spikes and the network gets busy, users start competing to get their transactions processed first. The only way to get it done is by paying higher fees. This hassle converts transactions into an auction where the one with the highest bid goes first. Everyone else either waits for their turn to come organically or pays more than they expected.
- Latency: Even after you send a transaction, it does not necessarily get confirmed instantly. Depending on network traffic, it can take seconds or even minutes to be finalized and get recorded. This wait, for everyday usage, can be painfully long.
- Poor UX for the payments: Lag in payment leads to volatility and bleeding payments. Honestly, nobody wants to wait or pay more for a cup of coffee.
These problems can be addressed by scaling Layer 1 directly. However, this way it will become centralized. Making them cheap will mean to sacrifice its security, defeating their core purpose.
What is Layer 2 Blockchain?
Layer 2 blockchains are systems built on top of Layer 1 to make it usable when demand spikes. Blockchain Layer 2, instead of executing transactions on the main chain, executes them outside it and returns with the final result to settle on Blockchain Layer 1. In short, Layer 2 does the job and Layer 1 verifies its results. This way, Layer 2 enhances the work without replacing Layer 1, but by simply leveraging its security.
Think of Layer 1 as a high-security vault. It’s slow, expensive to access, but extremely reliable. Layer 2 is like those fast workspaces outside the vault, where most of the day-to-day actions happen. You don’t open the vault for every small task; you only use it to record the outcome.
Layer 1 vs Layer 2 blockchain
The key trick used by blockchain Layer 2s is batching. It helps them to see and work on the problem from a different angle. Batching allows them to compress thousands of transactions into a single proof. This single proof is then verified by a Layer 1 blockchain like Ethereum.
This way Laye 2s do not make Layer 1 faster, but they reduce how often you use it. Fees thus go down as less data hits the main chain, and transactions get faster as most of the work happens off-chain.
Popular Layer 2 Blockchains You Should Know
Arbitrum and Optimism, slowly and steadily, have become the economic backbone of Ethereum DeFi. Value in billions moves through them daily – without lag or glitch. Lately, many DEXs have moved to Arbitrum because traders can’t afford mainnet gas.
Polygon was once brushed off as ‘just a sidechain,’ but has evolved into a full Layer 2 ecosystem. Its zk-based tech focuses on real-world adoption and payments.
A special shoutout to the Lightning Network. As Bitcoin’s Layer2, it is not entirely perfect and can feel clunky. However, it gives a clear message that if scaled carefully, even the most conservative chains are not out of reach.
Final Thoughts on Layer 2 Blockchains
Blockchain navigates the scalability trilemma, which involves striking a balance between speed, decentralization, and security. When the Layer 1 and Layer 2 blockchain unite and work together, this is fixed.
Layer 1 is where fundamental rules are set, and transactions are finalized with maximum security, making it expensive, congested, and slow. Layer 2 enters the picture at this point. It manages transactions off the main chain, reducing the overall cost and expediting the process. Since it is built on top of blockchain Layer 1, it then settles these transactions back onto it, providing the much-needed security.
Layer 2 matters because they provide much required breather to Layer 1 so that it can grow. They allow Layer 1 to stay credible, thriving on being secure, neutral, and decentralized. In short, Layer 2 cannot be considered optional, as in the future, it cannot be a single layer getting all the jobs done!
FAQ’s
Explain the differences between Layer 1 and Layer 2 blockchains.
Layer 1 is the base blockchain where transactions are finalized and secured. Its main aim remains to keep transactions secure and decentralized. Layer 2 sits on top of Layer 1 and handles most transactions off-chain, making things faster and cheaper. However, in the end, Layer 2 returns to Layer 1 for final security.
Why can’t Layer 1 blockchains just be upgraded to handle everything?
Making Layer 1 faster and cheaper usually means sacrificing decentralization or security. Layer 2 exists because Layer 1 is intentionally conservative, with the main focus being trustworthy, not fast.
Are Layer 2 blockchains safe to use?
Layer 2s inherit their security from Layer 1, so they are safe to use. Transactions on Layer 2 may happen off-chain, but the final results are still settled and verified on the main blockchain. If a Layer 2 misbehaves, Layer 1 acts as the ultimate judge.
Does using Layer 2 mean I’m not really using Ethereum or Bitcoin?
You are still using them, just more efficiently. Think of Layer 2 as the execution layer and Layer 1 as the court of record. Most users interact with Layer 2, but Layer 1 still decides what’s final.
Are Layer 2 blockchains only useful for DeFi and NFTs?
While DeFi and NFTs were early use cases, Layer 2s are better suited for things that need quicker reflex timing. Crypto interaction made for gaming, payments, social apps, and everyday crypto usage requires instant results, which are delivered through Layer 2.
What happens if a Layer 2 network goes down?
Your assets are still protected by Layer 1. Most Layer 2 designs allow users to withdraw funds back to the main chain even if the Layer 2 experiences issues.
Are all Layer 2s the same?
That is not entirely true. Although all Layer 2s are built on Layer 1s, they are different in their functionalities. Some focus on speed, others on privacy, payments, or zero-knowledge proofs. Just like Layer 1s, each Layer 2 reflects different design choices and trade-offs.
Will Layer 2 blockchains replace Layer 1s?
Layer 2 makes things faster and cheaper, but it still depends on Layer 1 to verify and finalize everything. Without Layer 1, Layer 2 has no anchor. So instead of replacing Layer 1s, Layer 2s work alongside them. One provides trust, the other provides scale. Together, they make blockchain usable in the real world.