Layer 1 (L1)
The foundational blockchain protocol handling consensus, security, and transaction execution, like Bitcoin or Ethereum.
What is Layer 1 (L1)?
Layer 1 (L1) blockchains are base networks executing all transactions natively, using consensus like PoW or PoS to validate blocks.
Ethereum, post-2022 Merge, uses PoS with 32 ETH staking for validators, processing 15-30 TPS at 1.5 gwei fees. Other examples include Solana (50,000 TPS via Proof-of-History), Avalanche (4,500 TPS sharding), and Polkadot (1,000 TPS parachains), with L1 market cap at $3.3 trillion in 2025. Scaling via code upgrades like Ethereum’s Dencun (2024) cuts L2 fees 90%.
L1s prioritize decentralization—Bitcoin’s 15,000 nodes—but face trilemma trade-offs, with energy use (Bitcoin: 150 TWh/year) versus speed, underpinning 70% of DeFi’s $100 billion TVL.
Related Terms
Active Management Burden
The ongoing requirement for liquidity providers to monitor and adjust positions in DeFi to optimize returns and mitigate risks.
Taproot
Taproot is a Bitcoin protocol upgrade that enhances privacy, efficiency, and smart contract capabilities by introducing a new transaction type and signature scheme.
Liquidity Hook (Uniswap)
Uniswap liquidity hooks are external smart contracts in Uniswap v4 that customize liquidity addition and removal in pools, enabling developers to inject logic before or after these actions for enhanced DeFi features.
Proof-of-Stake (PoS) Ethereum
A consensus mechanism used by Ethereum to secure its network and validate transactions.
Liquidation (Lending)
The automated sale of a borrower’s collateral when its value falls below a protocol’s required threshold.
Mining and Miner
Mining is the process of validating transactions and adding new blocks to a blockchain by solving computational puzzles, and a miner is who performs this task to earn rewards.