Key Takeaways
The blockchain space is expanding rapidly, exacerbating the scalability problem.
Layer-1 solutions are used to tackle the scalability problem. Layer-1 blockchain protocols have to be decentralized, secure, and scalable.
There are three approaches to implementing layer-1 solutions – PoS, PoW, and sharding.
Popular layer-1 tokens can easily be purchased on Binance.
The blockchain space is expanding rapidly as new solutions and applications are constantly being launched on various networks, many of which face the scalability problem. Scalability is one of the elements of the famous "blockchain trilemma," which poses that it is extremely difficult for a blockchain network to achieve sufficient scalability, security, and decentralization simultaneously. In this post, we will consider the issue of scalability, the proposed solutions, and how you can buy popular layer-1 tokens on Binance.
The Scalability Trilemma
As postulated by Vitalik Buterin, the founder of Ethereum, the term “scalability trilemma” refers to a blockchain’s capacity to juggle three key organic features – security, scalability, and decentralization.
The trilemma states that any blockchain system can only feature two properties out of the three at once. Thus, the current blockchain technology will always have to compromise on one of the fundamental properties. An excellent example of this is Bitcoin.While its blockchain has managed to optimize decentralization and security, it has had to compromise on scalability – through no fault of its own.
What Are Layer-1 Blockchains And How Do They Work?
Blockchain scalability is the expansion of a network in digital space in terms of transaction processing speeds and processing power to accommodate the addition of new applications and the increase in user operations. By scaling, blockchain networks can compete with centralized networks for transaction volumes, application buildup, and user engagement if they offer higher processing capacity. From a technical standpoint, “scaling” refers to an increase in the throughput rate, measured in terms of the number of transactions per second.
One of the fundamental approaches to tackling the scalability problem is introducing layer-1 solutions. A layer-1 blockchain is the base protocol itself, and improving this ground-level infrastructure can make the system much more scalable. The two most popular layer-1 improvements include modifying the consensus protocol and introducing sharding functionality.
Examples of operating layer-1 blockchains include Bitcoin, Ethereum, BNB Chain, Litecoin, and Avalanche. However, Bitcoin remains the most affected by scalability issues, since the underlying network relies on the increase in the number of miners to ensure higher transaction throughput and volumes.
Types of Layer 1 Blockchain Solutions
Layer-1 blockchain protocols have to be decentralized, secure, and scalable. To achieve this, network architects and developers rely on several methods to increase the system's scalability.
Consensus Protocol
Proof-of-work, or PoW, is the original consensus mechanism used in Bitcoin and Ethereum, although the latter has recently migrated to proof-of-stake (PoS), described further below. PoW aims to achieve validator consensus and network security by incentivizing miners to commit computing power to solve complex cryptographic puzzles. However, PoW struggles with two main issues: it can be comparatively slow and resource-intensive.
Proof-of-stake, or PoS, is a different mechanism for reaching a distributed consensus in a blockchain network. Validators authenticate block transactions based on their holdings of the blockchain's native token, or their "stake" in the network. While in PoW-based systems it is the expanded computational power that ensures that validators have sufficient "skin in the game" and are disincentivized to game the system, in PoS it is holding a sizable amount of the blockchain's token whose value can drop if the decentralized consensus is breached.
Switching from one consensus mechanism to another can massively improve a blockchain's throughput and help it scale. Yet, such a dramatic change can be challenging to implement as it requires a broad consensus among the network's participants.
Sharding
Sharding is another approach to improving scalability that has been ported from the distributed databases sector and adapted for layer-1 blockchains. Sharding entails the breaking up of a blockchain network into a series of separate database blocks known as “shards” – hence the term “sharding.” This approach also eases the default requirement for all nodes to process all transactions to maintain the network, allowing the shards to work in a parallel sequence. This helps to increase the network's overall capacity.
Popular Layer-1 Tokens
Layer-1 tokens have been gaining considerable traction since their launch, and the most popular ones trade on the Binance exchange:
Ethereum (ETH)
BNB
Solana (SOL)
Cardano (ADA)
Polkadot (DOT)
Avalanche (AVAX)
Algorand (ALGO)
* This list is ranked according to market cap as of December 8, 2021, and does not constitute a recommendation or endorsem*nt by Binance to buy or sell any currency.
How to Buy Layer-1 Tokens?
Are you thinking of getting your hands on these popular tokens? Here is a step-by-step guide for buying them on the Binance exchange.
1. Make a fiat deposit via an e-wallet transfer or bank transfer on Binance. Be sure to check the available fiat channels for desired currencies.
Optional: Convert the fiat currencies to BUSD or USDT to trade a greater variety of tokens.
2. Purchase layer-1 tokens through a wallet purchase, or directly with a credit/debit card.
3. To stake layer-1 assets, transfer the tokens from the Binance crypto address to a MetaMask wallet address by following the instructions.
Conclusion
Scalability is one of the challenges in the way of global crypto adoption. As demand for cryptocurrencies increases, pressure to scale blockchain protocols will also mount. Since both blockchain layers have certain limitations, the solution in the future will be to build a protocol that can tackle the blockchain trilemma.
Ready to buy cryptocurrencies? Kickstart your cryptocurrency journey with Binance
Get started by signing up for a Binance.com account or download the Binance crypto trading app. Next, verify your account. After you have verified your account, there are three main ways to buy cryptocurrencies on Binance using cash: via bank transfer, debit or credit card, or e-wallet options.
Buy BUSD, BNB, and a variety of other cryptocurrencies with a debit card, credit card, or bank transfer
Linking your debit card, credit card, or bank account (available in many regions) is one of the easiest ways to buy bitcoin and hundreds of other cryptocurrencies.
This article was edited on July 27, 2022.
Disclaimer: Cryptocurrency investment is subject to high market risk. Binance is not responsible for any of your trading losses. The opinions and statements made above should not be considered financial advice.
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FAQs
Layer 1 is the name given to a base blockchain like Bitcoin or Ethereum. It is the first level of the ecosystem and corresponds to the main chain of the network. Layer 2 solutions and sidechains can be built on top of this basis that layer 1 provides.
What is layer 1 blockchain tokens? ›
Layer 1 is the name given to a base blockchain like Bitcoin or Ethereum. It is the first level of the ecosystem and corresponds to the main chain of the network. Layer 2 solutions and sidechains can be built on top of this basis that layer 1 provides.
What are the most popular layer 1 tokens? ›
Even though Bitcoin is the most widely used currency on this Layer 1 list, Ethereum has a strong ecosystem and is considered to be the most decentralized Layer 1 currency, which makes ETH one of the best cryptos to invest in.
Is Cardano a layer 1? ›
Cryptocurrencies with this feature are often called "layer 1" or "L1" cryptocurrencies. This means that they are a platform, on which one can then build other things on top. Ethereum, for example, is also a L1 cryptocurrency (like Cardano).
What are all the layer 1 solutions crypto? ›
Bitcoin, Ethereum, and Polkadot are all considered Layer 1 blockchains. They are the base-layer blockchains that process and record transactions for their respective ecosystems, featuring a native cryptocurrency – typically used to pay fees and provide broader utility.
Is Cardano layer 1 or 2? ›
Layer 1: functionality
With this visual schematic in mind, Cardano is the layer 1 (the base network), which itself includes three independent layers: Network layer. Consensus layer.
How many layer 1 blockchains are there? ›
List of Layer 1 Blockchains (L1s) Discover 15 Layer 1 Blockchains (L1s) across the most popular web3 ecosystems with Alchemy's Dapp Store.
Is Dogecoin a layer 1 token? ›
Dogecoin, on the other hand, is more scalable via its layer-one protocol without the need for an extra network. The latter is perceived as better blockchain technology which typically should not rely on a third-party solution. The term layer one is used to define the primary blockchain architecture.
What is the most decentralized layer 1 crypto? ›
Bitcoin (BTC)
The first and best-known cryptocurrency, Bitcoin, is widely considered one of the most decentralised digital currencies, if not the most decentralised. The Bitcoin network is made up of more than 13,000 nodes spread across the world.
What is the fastest layer 1 blockchain? ›
Solana is currently one of the fastest blockchains, with 3,400 transactions per second (TPS).
XRP is a Layer 1 coin, which means it runs on its own network.
Can Solana surpass Ethereum? ›
Another key factor behind Solana's case for overtaking Ethereum is the sheer level of momentum generated by the network and its native cryptocurrency, SOL.
Does Solana have layer 2? ›
SAN FRANCISCO, February 27, 2023--(BUSINESS WIRE)--Eclipse is launching with Polygon, the leading Ethereum scaling protocol, to launch Polygon SVM, the first Solana-equivalent scaling solution.
Is Solana a layer 1 solution? ›
Solana is a highly scalable layer 1 Blockchain built for mass adoption.
Is Polkadot a layer 1 solution? ›
Polkadot operates at a deeper level than a blockchain like Ethereum—think of it as providing a foundation on which others crypto projects can build. It calls itself a Layer 0 blockchain, whereas Ethereum and similar blockchains like Solana (SOL) and Cardano (ADA) are called Layer 1 blockchains.
Is Chainlink a layer 1? ›
Oracles and smart contracts
That's primarily because Chainlink is not a Layer 1 blockchain like Ethereum, Solana , Avalanche, or Cardano. Instead, Chainlink is a decentralized blockchain oracle network that feeds off-chain real-world data to on-chain smart contracts.
Is Matic Layer 2 and layer 1? ›
What is Polygon (MATIC)? Polygon is a layer 2 scaling solution on the Ethereum network. While it exists alongside the original chain, it creates a separate chain that is faster, maintains higher TPS (transactions per second), and lowers fees per transaction.
Is Cosmos a Level 1? ›
Cosmos is the first layer 0 Blockchain that enables interoperability between different systems.
Is ADA Cardano better than Ethereum? ›
Cardano system is more scalable than Ethereum and can handle more transactions. Ethereum struggles with transaction volume. When things are calm, the network works fine. But when a bull market starts and millions of new investors get into crypto, Ethereum can't keep up.
Which crypto will be the next Solana? ›
At the beginning of 2023, Aptos has the potential to be either the Solana of 2021 or the Solana of 2022. In the first scenario, the price of Aptos could skyrocket as traders dig into the numbers and realize just how much the crypto might be undervalued.
VeChain is a layer-1 smart contract platform that allows developers to create unique smart contracts and DApps on top of it. Its applications in logistics, supply chain management and other industries help businesses enhance their operations.
Is Fantom a layer 1? ›
Fantom is a layer-1 blockchain focused on scalability and cost-effectiveness. Like its competitors, Fantom wants to make it easier to access innovations like NFTs, smart contracts and other digital assets for ordinary users. This also extends to decentralized applications – or dApps.
Which crypto can give 1000X in 2023? ›
Ethereum (ETH)
Its network powers decentralized applications (Dapps), smart contracts, and stablecoins and is used by over 40 million users. This makes ETH a great long-term investment that could potentially multiply your investment up to 1000X in 2023.
Which crypto will 100x in 2023? ›
As these assets gain traction, one of the thriving cryptocurrencies in this investment scene is DigiToads (TOADS). With its brilliant performance following its launch, experts predict it could pull over 100-fold in profits by the end of 2023.
Which coin will reach $1 in 2023? ›
The top 5 cryptos under $1 that could give 50x gains in the 2023 bull market are RenQ Finance, Shiba Inu, Cardano, Dogecoin, and Algorand. As with any investment, it is important to conduct your due diligence and invest only what you can afford to lose.
Is polygon a layer 1? ›
Polygon is a Layer 2 blockchain that aims to help Ethereum with its scalability. By acting as a Layer 2 protocol, Polygon doesn't aim to duplicate Ethereum's functionality. Instead, it helps improve transaction speeds and lower costs for developers.
Is AVAX layer 0 or layer 1? ›
Avalanche is a layer 1 smart contract based blockchain that tries to address the most challenging issues in the space such as transaction fees and scalability.
What are the top layer 0 Cryptos? ›
The three most popular Layer 0s are Cosmos, Polkadot and Avalanche.
What is world's smallest blockchain? ›
Mina is the world's lightest blockchain, powered by participants. Using zero knowledge proofs, Mina is creating the infrastructure for the secure, democratic future we all deserve.
Which are Web 3.0 coins? ›
Web 3.0 crypto coins are cryptocurrencies that secure blockchain projects that run on smart contracts over the internet. Web 3.0 gives internet users more control over their data, while web 3.0 coins allow users to own a piece of the internet.
At Ripple (XRP), the management level is again demonstrating increased optimism. The RippleNet network could increasingly replace SWIFT as early as five years from now, says project manager Asheesh Birla.
Will banks use XRP? ›
Despite many challenges posed by adopting blockchain technology for international banking, XRP holds a strong position in this industry. There are many use cases for the blockchain, and it is used by many banks due to its operational benefits.
What coin is linked to XRP? ›
Key Takeaways. Ripple is the company that is behind XRP, the cryptocurrency. Bitcoin transaction confirmations may take many minutes with high transaction costs, while XRP transactions are confirmed in seconds with little cost. XRP is a technology that is mainly known for its digital payment network and protocol.
Can Solana beat Cardano? ›
In terms of price performance over the last year and how well both digital assets are doing compared to their all-time high values, Cardano emerges as the better option over Solana. Where SOL is down 92.44% from its $259 ATH price, ADA is down 89.42% from its $3.10 ATH, data from Messari shows.
Could Solana reach $1000? ›
The prospect of Solana reaching the $1,000 milestone remains uncertain, but its strong developer community and ongoing innovations suggest that it has the potential to achieve significant growth in the ever-evolving crypto market.
Is Polkadot better than Solana? ›
In terms of transaction speeds, Solana is much further ahead of Polkadot. While Polkadot can reach around 1,000 transactions per second (TPS), Solana has a maximum speed of 65,000 TPS, making it one of the fastest blockchains on the market.
Is Shiba a layer 2? ›
It has announced that SHIB The Metaverse will be built on top of Shibarium, Shiba Inu's highly anticipated Ethereum Layer 2 (L2) blockchain.
Will Cardano have layer 2? ›
Cardano Gets On-Chain Gaming Boost as Paima Layer 2 Goes Live.
Is Tezos a layer 2? ›
Tezos transaction optimistic rollups (TORU)
A rollup is a layer-2 scaling solution that uses cryptographic proofs to make blockchain transactions quicker and cheaper.
What layer is Cardano on? ›
Within the Cardano platform, Ada exists on the settlement layer. This layer is similar to Bitcoin and keeps track of transactions. The second layer is the computation layer and is designed to be similar to Ethereum, enabling smart contracts and applications to run on the platform.
Solana was once regarded as one of the most popular blockchain networks in the world. It was even considered an 'Ethereum-killer' for its incredible transaction speed and much lower gas fees.
What is best than Solana? ›
Alternatives to Solana
- Corda. R3. A blockchain platform built for business and longevity. ...
- DigiByte. DigiByte Global. DigiByte is more than a faster digital currency. ...
- CoinEx Smart Chain (CSC) CoinEx. ...
- Aurora. Aurora. ...
- Avalanche. Avalanche. ...
- Aptos. Aptos. ...
- Arbitrum. Offchain Labs. ...
- 5ireChain. 5ire.
Base, a new Ethereum Layer 2 developed by Coinbase, has integrated Chainlink on its testnet to provide decentralised app developers with secure, off-chain price data.
Is Polygon a Layer 2 solution? ›
Polygon is a Layer-2 scaling solution created to help bring mass adoption to the Ethereum platform. It caters to the diverse needs of developers by providing tools to create scalable decentralized applications (dApps) that prioritize performance, user experience (UX), and security.
What blockchain is Polkadot built on? ›
Technical details. The Polkadot network has a primary blockchain named "relay chain" and many user-created parallel chains called "parachains".
Is ANKR a layer 1? ›
Ankr is a platform that provides tools to streamline access to Web3, a term that encapsulates the emerging generation of blockchain-based decentralized internet platforms like Ethereum and Polkadot, among scores of other Layer-1 blockchains.
Is Uniswap a layer 1? ›
The Layer 1 network of the Uniswap Protocol is the Ethereum blockchain. All trades and liquidity transactions are processed by the Ethereum network and stored in the Ethereum blockchain.
What is blockchain layer 1 example? ›
Bitcoin, Litecoin, and Ethereum, for example, are Layer-1 blockchains.
What is layer 1 token example? ›
What is a layer-1 token? In simple terms, Layer-1 coins are the native coins of Layer-1 blockchains. A Layer-1 blockchain validates and supports their own network without requiring support from another network and reimburses transaction fees with cryptocurrencies. An example of a Layer-1 coin is Ether (ETH).
Is Solana a layer 1? ›
Solana is a highly scalable layer 1 Blockchain built for mass adoption.
Ethereum (ETH)
Its network powers decentralized applications (Dapps), smart contracts, and stablecoins and is used by over 40 million users. This makes ETH a great long-term investment that could potentially multiply your investment up to 1000X in 2023. Ethereum has incredible long-term potential.
How do layer 1 blockchains make money? ›
Blockchains earn revenue from transaction fees while their costs are what they pay for security via issuance. Simply put: Net Profit = Transaction fees (in $) - Issuance (in $)
Is XRP a layer 1 blockchain? ›
XRP is an open-source, layer-1, cryptocurrency designed by the company, Ripple, to compete with the SWIFT network by enabling low-fee, instant international money transfers.
What are the types of layer 1 Blockchains? ›
Types of Layer 1 Blockchain Solutions
There are two main types, proof of work and proof of stake. Proof of Work is the consensus mechanism used by Bitcoin, the oldest crypto token on the market.
Is polygon a layer 1 token? ›
Polygon is a Layer 2 blockchain that aims to help Ethereum with its scalability. By acting as a Layer 2 protocol, Polygon doesn't aim to duplicate Ethereum's functionality. Instead, it helps improve transaction speeds and lower costs for developers.
Is chainlink a layer 1? ›
Oracles and smart contracts
That's primarily because Chainlink is not a Layer 1 blockchain like Ethereum, Solana , Avalanche, or Cardano. Instead, Chainlink is a decentralized blockchain oracle network that feeds off-chain real-world data to on-chain smart contracts.
Is Solana layer 1 or 0? ›
Solana is a Layer 1 blockchain designed to facilitate smart contracts and the creation of new decentralized applications (DApps). With its user-friendly interface, slick branding and easy-to-understand messaging, this blockchain shot to fame.
Is AVAX a layer 1? ›
Avalanche is a layer 1 smart contract based blockchain that tries to address the most challenging issues in the space such as transaction fees and scalability. AVAX token is used in the platform for paying fees and securing the platform.
