The number of transactions and cryptocurrency users is increasing exponentially along with the adoption of blockchains. If you’ve been dabbling in cryptocurrency and blockchain, you must have heard about layer-1 blockchain. In this article, we will explain layer-1 blockchain in detail and help you understand its capabilities and issues.
What is a Layer-1 Blockchain?
The underlying core blockchain architecture is referred to as Layer-1. Layer-1 protocols include Ethereum, BNB Smart Chain, Bitcoin, and Solana. Because these are the primary networks in their ecosystem, they are known as layer-1.
In simpler words, when a protocol processes and completes transactions on its blockchain, it is considered layer-1. They also have a native token that they use to cover transaction costs.
Layer-1 Blockchain issues
The inability of layer-1 networks to scale is a prevalent issue. Examples of layer-1 networks with scalability concerns include Ethereum and Bitcoin. Both use a distributed consensus approach to protect the network.
This indicates that each node independently verifies each transaction before it is validated. The mining nodes compete with one another to solve a challenging computational problem, and the winners are rewarded with the native cryptocurrency of the network.
In times of heightened demand, Bitcoin and other large blockchains have had difficulty processing transactions. The Proof of Work (PoW) consensus technique used by Bitcoin and Ethereum consumes a lot of computational capabilities.
Although PoW guarantees decentralization and security, PoW networks also tend to slack when there are too many transactions. As a result, fees go up, and transaction confirmation times are extended.
In other terms, before a transaction can be validated, it must first pass the independent verification of many nodes. This is a productive approach to recording and storing accurate, validated data on the blockchain while reducing the danger of attack from bad actors.
However, the throughput demand becomes an ever-growing problem once you have a network as well-known as Bitcoin or Ethereum. Users will experience longer wait times for confirmations and higher transaction costs when the network is congested.
Layer-1 Scaling Solutions
Although it’s simple to understand how innovative blockchain is, scalability—the ability of a system to expand while meeting rising demand—has always posed a problem. Highly secure and decentralized public blockchain networks frequently have trouble reaching high throughput.
The Blockchain Trilemma, which asserts that it is nearly impossible for a decentralized system to simultaneously attain equally high degrees of decentralization, safety, and scalability, is frequently used to explain this situation. Blockchain networks can, in reality, only include two of the three elements.
Although blockchain developers have been focusing on scalability issues for a while, there is still much debate over the optimal choices. Below are some scalability solutions for Layer-1 Blockchain:
Protocol Changes
Numerous projects, including Ethereum, are switching from slower, more inefficient consensus mechanisms like Proof-of-Work (PoW) to quicker, more efficient protocols such as Proof-of-Stake (PoS). Both Bitcoin and Ethereum use PoW, in which miners use their computing power to solve cryptographically challenging equations.
PoW is fairly secure, but the downside is that it can be extremely sluggish. Ethereum can barely handle 15-20 transactions daily, compared to Bitcoin’s seven transactions each second. Ethereum is attempting to go from Proof of Work to Proof of Stake.
Sharding
Shard is a type of database partitioning that can be used with distributed ledgers on blockchains. A network and its nodes are split into many shards to distribute the workload and increase speed. Each shard controls a piece of the network’s activity; hence, each shard will have its transactions, nodes, and distinct blocks.
Thanks to sharding, each node does not have to keep a complete copy of the entire blockchain. Each node alternatively reports the work accomplished to the main chain to transmit the status of their local data.
Examples of Layer-1 Blockchain
Layer-1 blockchains come in great diversity, and many of them offer special use cases. There are many blockchain networks, and each one addresses the Trilemma of decentralization, safety, and scalability in a unique way.
Elrond
Elrond is a layer-1 network established in 2018 and uses sharding to increase its performance and scalability. The Secure Proof of Stake system and Adaptive State Sharding are the Elrond blockchain’s two standout characteristics. This blockchain can execute more than 100,000 transactions per second.
Adaptive State sharding occurs through shard splits as the network removes or gains members. Sharding affects every network architecture aspect, such as its data and transactions.
Additionally, validators switch between shards, which lessens the possibility of a takeover attempt at a shard. The native token of Elrond, EGLD, is employed for transaction costs, DApp deployment, and rewarding users who participate in the network’s validation system.
Harmony
Harmony is a layer-1 network that supports sharding and uses the proof of stake mechanism. The blockchain’s mainnet includes four shards, each continuously generating and verifying new blocks.
Because each shard can move at its rate, they can all have varying block heights. Harmony uses a “Cross-Chain Finance” approach to draw consumers and developers. Users can swap their tokens without the typical custodial concerns associated with bridges, thanks to the crucial role played by trustless bridges to Ethereum and Bitcoin.
Final Thoughts
There are several layer-1 networks in the current blockchain ecosystem. It can be daunting initially, but after you learn the fundamental ideas, it gets simpler to comprehend this network’s general structure and architecture. The primary hurdle to the widespread adoption of cryptocurrencies is scalability. The important protocols designed to address this issue are crucial for ensuring that cryptocurrencies are sustainable and quick enough for everyday transactions.
