In simple terms, Layer-1 coins are the native coins of Layer-1 blockchains.
A Layer-1 blockchain validates and supports its own network without requiring support from another network and reimburses transaction fees with cryptocurrencies.
An example of a Layer-1 coin is Ether (ETH). Ether runs on its own blockchain, Ethereum.
Layer-1 blockchains are built for functionality but often lack scalability.
Scalability becomes an issue when more users utilize the network. A network that is unable to handle more users will cause the network congestion and transactional times to slow down or lag.
To counteract this, Layer-2 protocols are built upon the current Layer-1 blockchain. The Layer-1 network provides security and consensus while the Layer-2 project helps with the scalability issue. This helps with transactional time.
Layer-1 Crypto Projects You Should Know About
Bitcoin is probably the most popular Layer-1 project.
Bitcoin has a few Layer-2 projects built upon its network such as the Lightning Network and Liquid Network.
Bitcoin operates on a proof-of-work mechanism and has a TPS ( transaction per second) time of 7 TPS which is rather slow as compared to VISA which stands at 24,000TPS.
By comparison, the Bitcoin Lightning Network is able to process up to 1,000,000 TPS. This shows the potential of having a Layer-2 protocol on the base layer of Bitcoin.
If Bitcoin is the winner, Ethereum would be the runner-up.
Ethereum is considered to be the first smart contract platform. This is mainly because of EVM (Ethereum Virtual Machine) which is a decentralized computer that developers interact with to create smart contracts.
Due to its compatibility, decentralization and strong ecosystem, Ethereum is a popular choice for developers to create new projects on the blockchain.
Solana is a faster version of Ethereum.
It uses a unique consensus mechanism known as Proof-of-History (PoH) which uses timestamps on the blockchain. This makes Solana one of the most high-performing and efficient blockchains to date. It’s great as a smart contracts platform.
Solana benefited from the scaling issue Ethereum and Bitcoin had by improvising from the early joiners.
Polkadot is an open-sourced blockchain. It allows different blockchains to be interconnected using parachains. It also uses a shared security system.
This allows the network to leave out the use of validators and miners for security.
Avalanche is also compatible with EVM. It uses a C-chain as a proprietary network chain.
This makes Avalanche versatile for developers who keep the C-chain in mind when creating smart contracts.
Celo is on a mission to help the public adopt the use of cryptocurrencies.
They are doing this by making bitcoin transactions available to smartphone users globally. Phone numbers are used as public keys.
Cardano differentiates itself by using a mathematical consensus mechanism and a unique multilayer architecture.
It was designed by experts in the field of cryptography and engineering. Besides being used as a transfer of value, ADA is also used to power the smart contract platform on the Cardano blockchain.
Final Thoughts On Layer-1 Tokens
While Layer-1 tokens are quite reputable in terms of their security and decentralization, they do lack scalability. Newer Layer-1 tokens have introduced scalable blockchains like Cardano or Solana however none of them have been stress-tested like Ethereum.
If you’re looking to buy some Layer-1 tokens, make sure you evaluate their use cases and how it works. Check out the list Coinranking has on Layer-1 tokens to know more about these tokens!