Layer 1 (L1)

Layer 1 (often abbreviated as L1) refers to the base blockchain architecture that directly processes and finalizes transactions on its own network. 

What is Layer 1 (L1) Blockchain?

In cryptocurrency and blockchain technology, Layer 1 (often abbreviated as L1) refers to the base blockchain architecture that directly processes and finalizes transactions on its own network. It is the foundational protocol layer that provides security, consensus mechanisms, and the ability to create and transfer digital assets without relying on external systems.

Key Layer 1 blockchains include Bitcoin, Ethereum, Solana, Avalanche, and BNB Smart Chain. Each of these blockchains maintains its own distributed ledger and has its own rules for validating transactions.

Technology Behind Layer 1

Layer 1 blockchains use decentralized networks of nodes that validate and record transactions. They employ different consensus mechanisms—such as Proof of Work (PoW), Proof of Stake (PoS), and newer variations like Delegated Proof of Stake (DPoS)—to achieve network security and trust without centralized control.

Layer 1 blockchains are responsible for:

  • Transaction validation and settlement
  • Network security through decentralization
  • Smart contract execution (in blockchains like Ethereum and Avalanche)
  • Token issuance and management

Because Layer 1 chains handle every transaction themselves, scalability has traditionally been a challenge, leading to the development of Layer 2 solutions (such as rollups and sidechains) designed to ease network congestion.

History and Evolution

  • Bitcoin, launched in 2009 by Satoshi Nakamoto, is the first and most well-known Layer 1 blockchain. It introduced the concept of a decentralized, trustless network using Proof of Work.
  • Ethereum, launched in 2015 by Vitalik Buterin and others, expanded Layer 1 capabilities by enabling smart contracts and decentralized applications (dApps).
  • Newer Layer 1 networks like Solana (2020) and Avalanche (2020) have focused on solving scalability and transaction speed issues by implementing innovative consensus designs.

Today, competition among Layer 1 blockchains focuses on achieving a balance of decentralization, security, and scalability—often referred to as the blockchain trilemma.

Why Layer 1 Matters

Understanding Layer 1 technology is important to understand for anyone interested in crypto investing, blockchain development, or decentralized finance (DeFi). These foundational blockchains underpin the entire ecosystem of cryptocurrencies and decentralized applications.