Blockchain scalability has been at the forefront of crypto since its inception. Find out how it is done and the hurdles that must be overcome for the blockchain’s mass adoption! Layer 1 vs Layer 2 has been a big debate over the past few years. As we have seen the blockchain onboard more users, it has become necessary to utilize further blockchain layers. 

A total of 84 million wallets were recorded in October 2022. This means user activity and transactions are rising, causing potential congestion and a reduction in performance. This is where the different blockchain layers come into play to get the job done. 

‍Read on to learn more about Layer 1 vs Layer 2 blockchain technology and how scalability has become a massive factor in the blockchain's expansion. 

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What issues does the blockchain currently face?

In the early days of blockchain, developers noticed that there were issues when trying to expand it. Despite paving the way for new technological advancements, several issues must be addressed to successfully move the technology forward. 

As more users adopt crypto, it becomes clear that important aspects such as functionality and user experience need redesigning.. Therefore, the question arises: how do we build blockchain technology for the future?

Ethereum's founder, Vitalik Buterin, coined the term ‘the blockchain trilemma', which helps to explain where blockchains fall short and what needs to be done by those developing the networks. ‍

These three issues make up the trilemma: 

• Scalability 
• Decentralization
• Security

When developing dApps and protocols, Web3 teams understand that it's near impossible to achieve all three of the above features at once; only two at a time. 

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Building the foundations with Layer 1 blockchain

When talking about Layer 1 vs Layer 2, it is good to understand the difference between each blockchain architecture layer. The first one to consider is Layer 1. 

Layer 1 blockchains are the fundamental layer of the ecosystem , acting almost like a skeleton on which the other layers are built. Without Layer 1, a blockchain ceases to exist. 

Each Layer 1 blockchain performs differently than others. 

For example, Ethereum is a Proof of Stake (PoS) blockchain, compared to Bitcoin and Litecoin, which are Proof of Work (PoW) blockchains. 

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Examples of Layer 1 Blockchains

The most notable Layer 1 solutions are Ethereum and Bitcoin. When it was introduced in 2009, it became clear that Bitcoin's network needed to be more scalable. In 2013, Ethereum picked up the pieces and introduced smart contracts. Despite the compromise, it became clear that scalability was an ongoing issue for blockchain technology. 

To learn more about Ethereum for beginners, check out our past entry to learn more about the biggest Layer 1 blockchain in crypto.

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Introducing scalability on the blockchain with Layer 2

‍Once the blockchain's timeline started to develop, we began to see the introduction of more utility from blockchains like Ethereum and Solana. But, as stated, many hurdles needed to be considered and overcome. 

‍Layer 2 blockchains were introduced to do just this. One thing that is always appreciated about Layer 2 is its adaptability. Layer 1 blockchains do not need to be changed for Layer 2 blockchains. 

A Layer 2 blockchain is described as the protocol that is layered on top of Layer 1 solutions. They increase the speed, security, and scalability of a preexisting blockchain. 

There are many examples of Layer 2 blockchains. Some of the most prominent examples are the Bitcoin Lightning Network and Ethereum Plasma. 

Bitcoin's Lightning Network allows transactions to be completed off-chain and more smoothly via the blockchain, increasing TPS. 

Ethereum Plasma follows a similar principle, acting as a 'child' chain plasmas allows transactions off the main Ethereum network.

There are, of course, other examples of Layer 2 blockchains, such as: 

• Polygon 
• Arbitrum
• Optimism

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Drawbacks of Layer 2 Blockchains

Layer 2 blockchains are a vital part of the modern blockchain. It is best to understand the potential drawbacks they can bring. 

• Withdrawal times - withdrawing funds from a mainnet like Ethereum can take considerable time. This can range from a couple of hours up to a week, and depends on the blockchain's traffic. 
• Liquidity - Layer 2 blockchains remove liquidity from the main blockchain. 
• Privacy and security - there are still issues related to user safety. Layer 2 solutions can be maintained independently without decentralization. In turn, more security and due diligence are required. 
• Composability issues - Ethereum is renowned for its interoperability model. Allowing other blockchains and protocols to communicate with one another, however, can create barriers. 

To learn more about crypto and blockchain be sure to check out the Cryptology Academy today!

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