Top Layer 1 tokens by market capitalization

Layer 1 is the foundational blockchain layer of a cryptocurrency. It is the base protocol (the main blockchain) where the native cryptocurrency operates. Layer 1 introduced with the launch of the first blockchain network, Bitcoin, in January 2009. Bitcoin's Layer 1 protocol defines the fundamental rules and functionalities of the blockchain, making it the foundation upon which subsequent blockchain projects were built.

The most popular Layer 1 blockchains are Ethereum, Bitcoin, and Binance Smart Chain (BSC). Ethereum, launched in 2015, is widely known for its smart contract capabilities and extensive ecosystem of decentralized applications (dApps). Bitcoin, the first-ever blockchain, remains the most significant cryptocurrency and store of value. Binance Smart Chain, introduced in 2020, gained popularity due to its compatibility with the Ethereum Virtual Machine and lower transaction fees.

Layer 1 blockchains employ various consensus mechanisms to achieve agreement on the state of the network and validate transactions. Some common Layer 1 consensus mechanisms include Proof of Work (PoW), where miners compete to solve complex mathematical puzzles to add new blocks, and Proof of Stake (PoS), where validators are chosen to create new blocks based on the amount of cryptocurrency they "stake" or lock up as collateral.

Blockchain Scalability refers to its capacity to handle a growing number of transactions. Layer 1 (the base blockchain) of networks like Bitcoin and Ethereum has faced challenges with slow transaction times and rising fees as user demand grows. Solutions to these issues include optimizing Layer 1 through techniques like sharding or adopting new consensus mechanisms, and complementing with Layer 2 protocols for better performance.

Different Layer 1 projects adopt varied approaches to address scalability. Some solutions include sharding (breaking the blockchain into smaller, parallel chains), increasing block sizes, improving consensus algorithms, or integrating with Layer 2 solutions. Projects like Ethereum are adopting sharding and proof-of-stake consensus through its Ethereum 2.0 upgrade, while others like Solana use unique architectures like the Solana Cluster to enhance throughput.

Layer 1 solutions tend to be more secure because they operate on the main blockchain, benefiting directly from its consensus mechanisms, decentralization, and security protocols. Layer 2 solutions, while often faster and more scalable, might introduce new vulnerabilities since they operate off-chain or with different security assumptions.

Layer 1 scaling refers to enhancements made directly to a blockchain's primary protocol to increase its capacity and throughput. This includes methods such as sharding, adjusting block sizes, adopting new consensus algorithms, optimizing data structure, upgrading network protocol, and more, all aimed at handling more transactions on the base layer itself. Examples: - Ethereum 2.0's Sharding: Ethereum's upgrade aims to increase throughput by dividing the blockchain into multiple parallel chains called shards. - Bitcoin's Block Size Increase: Bitcoin Cash, a fork of Bitcoin, increased its block size to 32MB from Bitcoin's 1MB, allowing for more transactions per block. - Cardano's Ouroboros Protocol: This unique PoS consensus mechanism offers greater transaction throughput by optimizing block validation. - Solana's Single Global State: Solana achieves high throughput using a single, compressed global state and a unique consensus model called Proof of History. - Avalanche's Subnetworks: Avalanche uses subnetworks, or custom blockchains, for parallel transaction processing, enhancing overall throughput.

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