Layer 1 refers to the foundational blockchain, such as Bitcoin or Ethereum, which serves as the primary chain of a network. Examples include Bitcoin, BNB Chain, Ethereum, and Solana. Layer 1 blockchains can process and finalize transactions independently. However, enhancing the scalability of these networks is challenging, leading developers to create layer 2 protocols that depend on layer 1 networks for security and consensus.
Most layer 1 blockchains struggle with scalability while prioritizing decentralization and security. To address this issue, layer 1 scaling solutions are employed, including layer 2 blockchains or sidechains built on top of layer 1 networks. These solutions maintain the same security features while bundling multiple transactions to send to the main network, significantly increasing transaction volumes and speeds.
Sharding, a prevalent layer-1 scaling technique, improves transaction throughput by partitioning the blockchain distributed ledger, akin to database partitioning. The network and its nodes are divided into shards, each handling a portion of the overall network activity with its transactions, nodes, and distinct blocks.
Sharding eliminates the need for each node to store a complete copy of the blockchain. Instead, nodes report their completed work to the primary chain, sharing local data, including account balances and other essential metrics.