What is a layer 1 blockchain? The base layer that powers Bitcoin and Crypto

A layer 1, or L1, blockchain is the core network of a blockchain ecosystem. It operates independently, without relying on other chains for validation or execution, and handles everything from transaction processing to consensus and storing data on its own ledger.

Often referred to as the mainnet or settlement layer, a layer 1 blockchain is the foundation upon which all other blockchain layers, including sidechains and layer 2s, are built.

Where Layer 2s extend performance on top of existing networks, Layer 1 is self-contained. They define their own rules, run their own validators, and issue their own native tokens. Bitcoin, Ethereum, Solana, Cardano and Avalanche all fit this description.

In this article, we will look at the history and functions of the foundational layer of Web3.

Inside a layer 1: how it is constructed

Each L1 blockchain includes several essential components that make it both functional and secure:

• Network nodes: Thousands of independent computers maintain identical copies of the blockchain and broadcast data among themselves. Their distributed nature prevents censorship and single points of failure.
• Consensus layer: The rule book for a deal. It determines how participants decide which transactions are valid and how blocks are added to the chain.
• Execution layer: On programmable blockchains such as Ethereum or Solana, this layer runs smart contracts: self-executing code that powers decentralized applications and automated transactions.
• Native cryptocurrency: Each L1 has its own coin that pays transaction fees, rewards validators, and supports on-chain governance. BTC secures Bitcoin, ETH powers Ethereum, and ADA drives Cardano.

How layers 1 process transactions

On the different networks, the flow is generally the same:

• Validation: Transactions are verified to ensure they follow protocol rules and have appropriate signatures and balances.
• Block formation: Verified transactions are grouped into candidate blocks.
• Consensus: Nodes agree on which block to add next, using the algorithm chosen by the network.
• Purpose: Once confirmed, the block becomes immutable; balances and updating of contractual data across the entire network.

This cycle repeats itself continually, thousands of times per day, without central monitoring.

Consensus mechanisms: the heart of the blockchain

The consensus mechanism defines how a blockchain reaches agreement and shapes its speed, security, and energy profile. Although there are many consensus mechanisms, the main ones are:

• Proof of work (PoW)–Introduced by Bitcoin, PoW miners solve cryptographic puzzles through computation. It is extremely secure but power intensive and limited to around seven transactions per second (TPS).
• Proof of Stake (PoS)–Validators lock tokens as collateral to gain the right to validate blocks. It replaces energy consumption with economic incentives.
• Delegated proof of participation (DPoS)–Used by Binance Smart Chain and others, this model relies on a smaller, elected set of validators to increase efficiency, trading some decentralization for speed.
• Evidence of history (PoH)–Solana’s unique system timestamps transactions before consensus, enabling thousands of TPS and sub-second block times.

The main layer 1 blockchains

Bitcoin (BTC) – Proof of work: The first and most secure blockchain. Processes approximately 7 TPS using energy-intensive mining, with an emphasis on decentralization and immutability over speed.

Ethereum (ETH) – Proof of Stake: The largest programmable blockchain, supporting smart contracts, NFTs and DeFi. After The Merge in 2022, it reduced power consumption by over 99% while laying the foundation for scalability with future rollups and sharding.

Solana (GROUND) – Proof of History + PoS: Known for its high throughput and low fees, Solana timestamps transactions before consensus to achieve sub-second block times.

Cardano (ADA) – Ouroboros Proof of Stake: a research-driven blockchain that emphasizes formal verification and layered architecture to separate settlement and calculation.

Avalanche (AVAX) – Avalanche Consensus: Uses probability sampling to quickly reach consensus. Offers sub-second finality and supports customizable subnets for application-specific channels.

Binance Smart Chain (BNB) – Delegated Proof of Stake: Operated by a limited set of validators, BSC trades decentralization for performance, providing fast, low-cost transactions compatible with Ethereum tools.

Timeline: Major Layer 1 Milestones

• January 2009: Bitcoin launched, proving decentralized consensus through proof of work as the first fully functional blockchain.
• July 2015: Ethereum goes live and introduces programmable, Turing-complete smart contracts to the blockchain ecosystem.
• September 2017: Cardano launches its Byron mainnet, formalizing proof of stake with the Ouroboros protocol and establishing a layered architecture.
• September 2020: Avalanche launches its mainnet, introducing a high-speed consensus mechanism and a subnet framework for customizable channels.
• September 2022: Ethereum completes merger, moving from proof-of-work to proof-of-stake and reducing energy consumption by over 99%.
• October 2023: Celestia is launching as the first modular blockchain focused on data availability and consensus separation.
• August 2025: Circle unveils Arc, a stablecoin-focused Layer 1, with a live public testnet in October and mainnet planned for 2026.

Every blockchain aims to address the same underlying challenge: the blockchain trilemma.

The blockchain trilemma

Ethereum co-founder Vitalik Buterin coined the term “blockchain trilemma” in 2017 to describe the challenge that blockchains cannot simultaneously maximize decentralization, scalability, and security, forcing trade-offs between all three.

• Security – Protection against manipulation or attacks.
• Scalability – Ability to efficiently manage high volumes.
• Decentralization – Distribution of control across many independent nodes.

Layer 1 scaling

Developers are continually looking for ways to increase blockchain throughput without compromising decentralization – a direct answer to the blockchain trilemma.

• Sharing : This technique divides the network into smaller parts, or shards, that process data in parallel to ease node workload and increase capacity. Ethereum initially planned for 64 shards, but in late 2025 it shifted its focus to proto-danksharding and danksharding, upgrades focused on data availability for Layer 2 rollups rather than full on-chain execution. Proto-danksharding (EIP-4844) introduces data blobs to improve storage efficiency, while full danksharding remains under development.
• Consensus optimization: Moving from energy-intensive proof-of-work to proof-of-stake, like the 2022 Ethereum merger, significantly improves efficiency. Some newer networks mix or adapt consensus models to balance speed, cost, and security.
• Block parameters: Larger blocks and shorter intervals can increase throughput but risk centralization. Larger blocks require more bandwidth and storage; Faster blocks raise issues with timing and the number of orphaned blocks.
• Protocol upgrades: Bitcoin’s Segregated Witness (SegWit) 2017 is a classic example of direct Layer 1 scaling. By separating signature (“witness”) data from transaction data, SegWit freed up block space and allowed more transactions per block without increasing its size.

Real-world applications

Layer 1 blockchains supported DeFi, powering lending, exchanges, and stablecoins through smart contracts. Ethereum and Solana have enabled NFTs and gaming, bringing digital ownership on-chain. They have also improved supply chain transparency, secured digital identity, and enabled the tokenization of real-world assets such as property and art.

Why they still matter

Layer 2s and sidechains contribute to speed, but layer 1s remain the source of truth. They provide final settlement, immutable history, and shared trust for all that is built above them.

Blockchain technology has advanced far beyond its 2009 origins, and the work has not slowed down. In November, the Ethereum Foundation announced its next major milestone: the Ethereum Interoperability Layer, which would allow any Ethereum L2 to instantly communicate with any other L2.

As blockchain technology evolves (from energy-intensive mining to modular quantum-resistant architectures), layer 1 blockchains continue to define the infrastructure of the decentralized internet.