Layer 1 Blockchains: The Foundation of Decentralized Networks

Why Layer 1 Architecture Matters

When you send Bitcoin or conduct a transaction on Ethereum, you’re relying on a layer 1 blockchain—the base network that processes and finalizes your transaction independently. But what exactly makes a blockchain “layer 1,” and why should you care about this distinction?

The answer lies in how blockchain networks solve the fundamental challenge of the industry: the ability to be decentralized, secure, and scalable all at once. Layer 1 blockchains form the backbone of the crypto ecosystem, directly validating transactions without depending on another network layer. Bitcoin, Ethereum, BNB Chain, and Solana all operate as layer 1 protocols, meaning they maintain their own native tokens and process transactions on their own infrastructure.

The Scalability Challenge Every Layer 1 Faces

Here’s the reality: building a truly secure and decentralized network comes at a cost. Bitcoin, the most secure layer 1 blockchain, processes only about 7 transactions per second. Why? The Proof of Work consensus mechanism prioritizes security and decentralization over transaction throughput. When demand spikes, confirmation times lengthen and fees skyrocket.

This is the core limitation that developers have struggled with for years. Changing the consensus mechanism, increasing block sizes, or implementing sharding—all potential layer 1 improvements—require massive coordination effort. Not everyone agrees on upgrades. Sometimes disagreements lead to hard forks, as seen when Bitcoin Cash split from Bitcoin in 2017.

How Layer 1 Networks Attempt to Scale

Several strategies exist for improving layer 1 throughput:

Block Size Increases: More transactions can fit into each block, but this comes with trade-offs in decentralization.

Consensus Mechanism Changes: Ethereum’s transition from Proof of Work to Proof of Stake through the version 2.0 upgrade demonstrates how networks evolve their core protocols.

Sharding Technology: Instead of each node storing the entire blockchain, the network divides into multiple shards. Each shard processes its own subset of transactions independently, then reports back to the main chain. This significantly increases overall throughput without sacrificing security.

Soft Fork Solutions: Bitcoin’s SegWit (segregated witness) example shows how backward-compatible updates work. By reorganizing how transaction data is structured, SegWit freed up block space for additional transactions without requiring every node to update immediately.

Diverse Layer 1 Solutions for Different Use Cases

The blockchain ecosystem isn’t limited to Bitcoin and Ethereum. Dozens of alternative layer 1 networks address the scalability trilemma differently:

Elrond takes sharding to the extreme, processing over 100,000 transactions per second through its Adaptive State Sharding mechanism. The entire network architecture—state, transactions, and validators—operates in sharded form, dramatically reducing the risk of shard-level attacks.

Harmony implements Effective Proof of Stake with four independent shards on its mainnet. Each shard can create and verify blocks at its own pace, enabling true parallel processing. The network’s cross-chain bridges to Ethereum and Bitcoin position it as an interoperability layer for multi-chain finance.

Celo forked from Go Ethereum in 2017 but diverged significantly by implementing Proof of Stake and mobile-first features. Instead of traditional wallet addresses, Celo users can transact using phone numbers or email addresses. The network supports multiple stablecoins (cUSD, cEUR, cREAL) designed to reduce barriers to crypto adoption.

THORChain operates as a cross-chain decentralized exchange built on the Cosmos SDK. Rather than wrapping or pegging assets—which introduce custody risks—THORChain acts as a vault manager facilitating native asset swaps across different blockchains. RUNE serves as both the settlement asset and security mechanism for all liquidity pools.

Kava merges Cosmos and Ethereum ecosystems through its co-chain architecture. Developers can build on either the EVM or Cosmos SDK environment, with seamless interoperability between both. Kava’s on-chain incentive programs reward top projects based on usage metrics.

IoTeX pioneered the intersection of blockchain and Internet of Things (IoT). The network enables device-generated data to become valuable digital assets through its MachineFi framework. Users retain complete ownership over their privacy while participating in an ecosystem of hardware (Ucam cameras, Pebble Tracker GPS devices) and software solutions.

Layer 1 vs. Layer 2: When You Need Both

Not every problem can be solved at layer 1. Sometimes the constraints are too fundamental. A blockchain game couldn’t realistically operate on Bitcoin—transaction confirmation taking hours makes gameplay impossible. Yet the game still needs Bitcoin’s security model and decentralization benefits.

Enter layer 2 solutions. These protocols build on top of layer 1 networks, inheriting their security while solving throughput limitations. Bitcoin’s Lightning Network exemplifies this approach. Instead of recording every payment directly to Bitcoin’s main chain, Lightning batches transactions into a single final settlement. Users transact freely off-chain at near-instant speeds, then the consolidated balance settles back to Bitcoin when they’re finished.

The division between layer 1 and layer 2 reflects a pragmatic reality: no single network solves every problem optimally. Layer 1 blockchains establish the trust foundation. Layer 2 solutions optimize the experience on top.

The Path Forward for Layer 1 Infrastructure

Today’s blockchain landscape features multiple competing layer 1 networks, each with distinct approaches to the scalability question. Understanding layer 1 architecture helps you evaluate new projects intelligently—whether they’re building their own base networks or constructing bridges between existing ones.

The evolution continues. Networks keep experimenting with novel consensus mechanisms, sharding techniques, and cross-chain communication protocols. Whether a blockchain prioritizes maximum decentralization, extreme throughput, or specialized use cases depends on its layer 1 design choices. These foundational decisions ripple throughout the entire ecosystem.