If you have been in the blockchain space for a while, you may have seen these terms Tier 1 and Tier 2 Used to refer to blockchain – but what does it mean? What’s the difference?
These terms describe fundamental differences in blockchain structure, and mastering them is critical to understanding blockchain scalability, security, and efficiency.
Looking for short answers? Essentially:
- First layer blockchain Are large, major foundational networks such as Bitcoin, Ethereum, and Solana. They are the trunks from which everything else branches. They’re trustworthy and secure, but often cumbersome because they’re designed as general-purpose tools rather than optimized for specific tasks. This means transaction speed is low and costs are high.
- Layer 2 blockchain It is a side network built on Layer-1 blockchain, such as Polygon, Immutable and Base. They are branches that sprout from the trunk of a tree. They often specialize in a specific niche, such as blockchain gaming, and process large volumes of transactions away from the main blockchain, allowing applications to run quickly without clogging up the layer 1 network. This means transaction speeds are high, costs are low – and security remains strong since it is derived from layer 1 of its fork.
- The third layer of blockchain It is a professional network built on layer 2 blockchain. They are leaves that sprout from branches. These are typically reserved for specific high-volume applications to prevent transactions from clogging the Layer 2 network. Since they are built specifically for one application, this means transaction speeds are very high and costs are very low.
Want a deeper understanding of how it works? Continue reading…
What is Layer-1 blockchain?
First layer blockchain It is the backbone of the decentralized world. They are responsible for processing and completing transactions at the pinnacle of security and integrity.
Bitcoin is the first Layer-1 blockchain. It is designed for peer-to-peer transactions and uses a proof-of-work consensus mechanism that trades speed and transaction volume for outright security – meaning that while it is ideal for securely processing small numbers of important transactions, it struggles to scale efficiently.
Ethereum expands on Bitcoin by introducing smart contracts, thereby enabling the development of decentralized applications (dApps). However, the rise of CryptoKitties, the first high-volume blockchain-based game, has made Ethereum so crowded that most of Ethereum’s traffic is dedicated to supporting the CryptoKitties game, resulting in transaction speeds Straight up, transaction prices straight up.
This hindered the development of some of the original Ethereum layer 2 blockchains (such as Polygon and Immutable) as well as new layer 1 blockchains (such as Flow) that aimed to solve the same problems.
Many other layer-1 blockchains have since sprung up, each trying to become a solid backbone for further development.
Layer 1 processes transactions through a network of nodes (independent sets of computer hardware) that verify the authenticity of the transaction and record it in a block. Once a block of transactions is verified, it is added to the blockchain, making transactions irreversible and secure.
Most Layer 1 blockchains are siled, meaning they cannot communicate with other Layer 1 networks, although there is growing interest in building bridges that would allow Layer 1 blockchains to communicate with each other. Communication tools, allowing assets to be sent between them.
What is a second-layer blockchain?
Layer 2 blockchain Built on layer 1 blockchain to extend its scalability or expand its functionality. They usually focus on a specific niche and aim to relieve some of the transaction burden of Layer-1, thereby providing faster and cheaper transactions for high-volume applications.
Polygon is one of the most famous Layer-2 solutions for Ethereum. It uses a series of sidechains to process transactions, which are then batched and finalized onto Ethereum – meaning you don’t pay for one expensive Ethereum transaction, but for a fraction of a transaction , this transaction is combined with many others, resulting in higher speeds and lower fees.
Immutable – a gaming-focused layer 2 – takes layer 2 technology even further by introducing zero-knowledge (ZK) summaries, which in short, allows for verification and processing of large volumes of transactions without introducing any security flaws, thus providing a new level of blockchain scalability.
Unlike layer 1 blockchains, because they are forked from their parent chain, many layer 2 networks can communicate with each other, allowing various applications to share data and collaborate with each other.
What is Layer 3 Blockchain?
The third layer of blockchain It used to be very rare, but it’s becoming more common as applications strive for peak optimization.
Layer 3 blockchains are built on top of Layer 2 blockchains and are usually built to support specific applications or games. This allows an app or game to benefit from faster transactions and lower costs.
This is usually done in anticipation that an application will be very popular, or if the tier 2 application is pushing a large number of transactions, causing the tier 2 to be clogged and affecting other applications on the network.
We recently wrote two articles about Layer 3 blockchains: Anomaly, an Ethereum Layer 3 artificial intelligence gaming platform; and Arbitrum Orbit, an Ethereum Layer-3 and predecessor to the popular web3 MMORPG LumiTerra.
Now that you understand the differences between Layer-1, Layer-2, and Layer-3 blockchains, it will be easier to understand and navigate the increasingly complex world of blockchain technology. Remember: layer 1 is the trunk, layer 2 is the branches, and layer 3 is the leaves!
