- assets such as tokens;
- any kind of information that requires the immutability of a DLT. For example, the historic price of an asset on a certain date.
It’s called a layer 1 because it’s the base layer that other things can be built on top of, such as smart contracts and dApps, and it does not depend on any lower-level DLT/blockchain network.
Some prominent examples of layer 1 networks include:
Layer 2 networks generally refer to solutions that provide increased scaling and throughput over what is possible on a base layer 1. Layer 1 networks can face bottlenecks, so a Layer 2 network that operates adjacent to a layer 1 network can process transactions in parallel to the L1, settling the net results back onto the L1 when needed; this lessens the load on the L1.
Some prominent examples of L2 technologies today include:
- Sidechains - these are kind of like their own L1 that interoperates into the main L1, sometimes called a “hub.”
- Rollups - these inherit some of the security of the L1. For “ZK” rollups, this is achieved through cryptographic proofs. For “optimistic” rollups, transactions on the L2 are processed “optimistically,” meaning that only if there is a dispute is the computation to perform the cryptographic proofs undertaken.
Radix will never need a layer 2 network as Radix achieves infinite linear scalability all on the L1.