When cryptocurrencies entered the mainstream, there was a lot of skepticism surrounding it. People were weighing the pros and cons of cryptocurrency becoming the new normal. The central pillar for crypto, which is Blockchain technology, became the new buzzword. It peaked a lot of people’s interest as it was the new emerging technology.
This detailed analysis helped industry experts figure out the benefits and drawbacks of the implementation of Blockchain technology. Blockchain offers enhanced security, immutability, and transparency. While these factors gear people towards Blockchain technology, there are also pressing concerns.
Scalability is becoming an issue as the demand for Blockchain continues to rise. Once it is improved, it can support a wide range of new applications. On top of that, it can make transactions as seamless as possible. This issue of scalability gives rise to the issue of Layer 1 vs. Layer 2, and has garnered much attention from users. To promote the use of cryptocurrencies, experts began to introduce multiple Blockchain layers. Blockchain development enhances network security and improves the record keeping process for users. It is to be noted that third-party solutions are implemented on top of Layer 1, to provide additional functionalities for scaling.
Let’s take a detailed look at Blockchain Layer 1 vs Layer 2. We will also identify their features and characteristics, and how they differ from one another.
Blockchain Layer 1 vs Layer 2 Solutions
Blockchain Layer 1 solutions focus on increasing the network’s capability to better manage and process a huge volume of transactions without any disruptions.
Blockchain Layer 2 solutions on the other hand concentrates on the integration of the main net of the Blockchain network with third parties.
Layer 1 and Layer 2 have distinct features in multiple aspects, so one must understand them in detail to understand their contrast.
About Blockchain Layer 1
Layer 1 Blockchain network is Blockchain’s core protocol. Layer 1 solutions can easily finalize, validate and verify transactions without dependency on any other network.
These protocols have their own crypto coins that help reimburse the transaction fees. To increase scalability, Layer 1 solutions aim to enhance the infrastructural foundation of the Blockchain protocol.
Layer 1 solutions offer the ability to use multiple techniques to improve scalability of the Blockchain network. Being able to alter the protocol rules enables the increase of transaction volume and speed. Layer 1 solutions can also make room for multiple sets of data and users.
About Blockchain Layer 2
These are secondary frameworks that are designed on top of the existing Blockchain ecosystem. The main goal of the Layer 2 solutions is to enhance the speed of transactions and to reduce the issues of scalability. Layer 2 solutions enable the easy delegation of data processing responsibilities that supports infrastructure. With no congestion in the existing core Blockchain tech, it allows for greater scalability.
Difference Between Layer 1 & Layer 2 Blockchain
In Layer 1 Blockchain scaling solutions, the improvements are made on the base of the Blockchain protocol. This is done to achieve scalability. Layer 1 solutions need various modifications to the Blockchain systems.
Layer 2 solutions on the other hand use off-chain services or networks. It transfers and distributes the transaction load onto different Blockchains.
Blockchain Layer 1 vs layer 2 differ in regards to the solutions users can derive from their execution. Sharing and consensus protocol enhancement are the different Layer 1 solutions that can be found.
Modification to things such as the block size and creation speed are also included in Layer 1 scaling for the effectiveness of the required functionalities.
These processes are managed by a Blockchain developer who has a deep knowledge and expertise about the different Blockchain layers and infrastructure.
With the Blockchain 2 Layer solutions, there are endless options to choose from. Offchain Layer 2 solutions can be provided by any network, protocol or application.
Layer 1 networks have native tokens that allow access to the network’s resources. It involves innovative designs of consensus processes, a crucial characteristic.
Layer 2 scaling solutions have the same functionalities as Layer 1 solutions. With the help of Layer 2 solutions, network speed and programmability are boosted as well as lowered transaction fees.
Drawbacks of Layers 1 & 2
One of the biggest drawbacks of implementing Blockchain layers is that they are difficult to integrate with the current protocols.
For instance, both Ethereum and Bitcoin are worth billions of dollars. Every day, users are trading millions of dollars. The process should not be complicated further by endless coding and experimentation. This is because a lot of unnecessary money would be spent.
There are also significant cost differences between the two Layers. Ethereum Layer 1 Blockchain transfers are an average of $50 to $125 (USD).
Polygon Layer 2 transactions on the other hand $0.05, which is significantly less as compared to Layer 1. Layer 2 solutions are therefore more cost-effective as compared to Layer 1.
The Future of Layer 1 & Layer 2
Scalability is one of the major issues that come with the Blockchain community being more excepting with the widespread use of cryptocurrencies. Since the demand for crypto is at an all-time high, so is the need to make sure that Blockchain platforms are able to scale. Because both of the Blockchain layers have some restrictions, the answer to the issue of scalability is to develop protocols that can overcome these hurdles.