Layer 1 and Layer 2: An Overview

Layer 1 and Layer 2 blockchain scaling solutions are improvements to the throughput—or processing speed—of any cryptocurrency blockchain network. They can include protocol updates or additional network solutions to help process more transactions.

Layer 1 includes updates such as changing block sizes, consensus mechanisms, or splitting the database into multiple parts (known as sharding). Layer 2 includes rollups (bundling transactions), parallel blockchains (known as side chains), and off-chain handling of transactions (known as state channels).

Why Layer 1 and Layer 2 Scaling Solutions Are Important

A blockchain is a decentralized network of nodes that processes crypto transactions independently, with consensus protocols that verify the accuracy of the transactions. The transactions are then recorded sequentially, forming a chain of data blocks that can’t be changed.