What makes a network Layer 1 is that it has its own consensus mechanism, such as proof-of-work or proof-of-stake, its own miners or validators, and its own native token used to pay transaction fees. All transaction data and security ultimately settle directly on this base chain, rather than being processed somewhere else and merely checkpointed onto it afterward.
Different Layer 1 networks make different design choices around consensus mechanism, transaction fee structure, and programmability, which is part of why they end up suited to somewhat different use cases despite all being base-layer blockchains. A Layer 1 can also change its own rules over time, sometimes through the same forking process used across blockchains generally, without necessarily needing a Layer 2 to alter how the base chain itself operates.
Layer 1 networks generally face a practical balancing act, sometimes described as a trade-off between decentralisation, security, and how many transactions the base chain can process directly. Increasing throughput without any other changes can come at the cost of decentralisation or security, depending on how it's done. This trade-off is part of why Layer 2 networks have developed alongside major Layer 1s: they build on top of a base chain to help it handle more activity, while still relying on that Layer 1 for final settlement and underlying security.
Key takeaways
- A Layer 1 blockchain is a self-contained base network with its own consensus mechanism and native token, like Bitcoin or Ethereum.
- All transactions on a Layer 1 are ultimately validated and settled directly on that base chain.
- Layer 1 networks generally face trade-offs between decentralisation, security, and transaction throughput, which is part of why Layer 2 networks have developed alongside them.
Layer 1 — frequently asked questions
Is Bitcoin a Layer 1?
Yes. Bitcoin has its own consensus mechanism, its own miners, and its own native asset, and transactions settle directly on its own chain, which makes it a Layer 1 network.
What's the difference between Layer 1 and Layer 2?
A Layer 1 is an independent base blockchain with its own consensus and settlement. A Layer 2 is a separate network built on top of a Layer 1 that ultimately relies on the base chain for final security and settlement.
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