Ethereum is about to start its layer 2 protocol soon due to its high gas fee and increasing scalability… but what is this layer 1 protocol ?
Layer 1 protocol refers to the core blockchain protocol itself, which is responsible for the fundamental operations of the network, including the validation and execution of transactions, maintaining the state of the network, and enforcing consensus rules. In the case of Ethereum, Layer 1 is the main Ethereum blockchain.
Layer 1 protocols are the foundation upon which Layer 2 solutions are built. They provide the base layer of security, decentralization, and trust that is required for the entire network to function.
Advantages of 1.0
Consensus Mechanisms: Layer 1 protocols use consensus mechanisms, such as Proof of Work (PoW) or Proof of Stake (PoS), to validate and confirm transactions on the blockchain.
Smart Contracts: Layer 1 protocols include a programming language that enables the creation of smart contracts, which are self-executing contracts with the terms of the agreement between buyer and seller being directly written into code.
Network Security: Layer 1 protocols are designed to provide high levels of security and immutability by maintaining a distributed network of nodes that are responsible for validating transactions and maintaining the integrity of the blockchain.
Transaction Finality: Layer 1 protocols provide finality for transactions, meaning that once a transaction is confirmed, it cannot be reversed or changed.
Interoperability: Layer 1 protocols can also be designed to be interoperable with other blockchain networks, allowing for the exchange of assets, data, and other information across different networks.
Trust: The decentralized and immutable nature of Layer 1 protocols helps to build trust in the network. Transactions on the blockchain are transparent, public, and permanent, providing a high degree of transparency and accountability.
Layer 1 protocols play a critical role in the functioning of blockchain networks like Ethereum, providing the foundational layer of security, decentralization, and trust that is required for the entire ecosystem to operate.
Limitations of layer 1
Even though this decentralized mechanism was a great development in the network, still there are some niches of development required….
Scalability: One of the biggest challenges facing Layer 1 protocols is scalability. As more users and applications use the network, the number of transactions on the blockchain can increase significantly, leading to slower transaction times and higher fees.
Limited Functionality: Layer 1 protocols have limited functionality when compared to traditional centralized systems. For example, they may not be able to handle complex operations like high-frequency trading or real-time data processing.
High transaction fees: Due to the limited capacity of the Ethereum network, transaction fees can be high during periods of high demand. This can make it expensive for users to interact with smart contracts and use decentralized applications (dApps).
Energy consumption: Ethereum, like other blockchain platforms, requires significant amounts of energy to maintain the network and process transactions. This can be a concern for those interested in environmental sustainability.
Lack of privacy: The Ethereum layer 1 protocol is not designed to provide strong privacy guarantees, as all transactions and smart contract code are publicly visible on the blockchain.
Mainly due to these limitations and especially due to the increase in the scalability there was a need of development an advanced protocol 2.0.