Crypto glossary

Layer 1 (L1)

A Layer 1 (L1) is a base blockchain that does not rely on another network for its security. Its own consensus rules decide which transactions are valid and final. Bitcoin, Ethereum and Solana are Layer 1s.

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What a Layer 1 does

A Layer 1 handles the core jobs of a blockchain by itself. It runs a consensus mechanism, such as proof of work or proof of stake, so that independent nodes agree on one history. It executes transactions, stores the ledger, and settles them, meaning that once confirmed, they are treated as final. Its native coin, such as BTC, ETH or SOL, usually pays network fees and rewards the miners or validators who secure it.

Layer 1 versus Layer 2

A Layer 2 (L2) is a network built on top of a Layer 1 that processes transactions elsewhere and then posts data or proofs back to the L1. It inherits much of its security from the L1 instead of providing its own. Rollups on Ethereum are the main example. The L1 acts as the court of final appeal; the L2 is a faster, cheaper lane that ultimately settles on it.

Different design choices

Layer 1s make different trade-offs between decentralization, security and scalability, a tension often called the blockchain trilemma. Bitcoin keeps its base layer simple and conservative. Ethereum chose to scale mainly through Layer 2s. Solana is a monolithic design that aims for high throughput on the base layer itself, which demands more powerful hardware from validators.

None of these choices is free. Higher throughput often means fewer people can afford to run a full node, while a slower base layer pushes activity to other layers.

Things to keep in mind

Calling a project a Layer 1 says nothing about its quality or security. A new L1 with few validators or low economic security can be easier to attack or halt than an established one. Look at how many independent validators there are, how the network has handled outages, and who controls upgrades.

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Frequently asked questions

Is Ethereum a Layer 1 or Layer 2?

Ethereum is a Layer 1. Networks such as Arbitrum, Optimism and Base are Layer 2s that settle on Ethereum.

Why can't Layer 1s just process more transactions?

They can, but usually at a cost: bigger blocks or faster times demand stronger hardware, which can reduce the number of independent nodes and weaken decentralization.

Is a Layer 1 coin the same as a token?

Not quite. A Layer 1's native coin is built into the protocol, while tokens are created by smart contracts running on the chain.

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All glossary terms · Educational reference only — not investment, legal, tax or financial advice.