What is the difference between L1 blockchain and L2 scaling solutions?

1. Basic concepts

• L1 blockchain, that is, the first layer of blockchain, is the basic layer of blockchain. Ethereum and Bitcoin blockchain all belong to L1. It builds the underlying frameworks such as the core consensus mechanism and ledger structure of blockchain.

• The L2 expansion solution is an additional layer built on L1, with the purpose of solving the performance bottlenecks and other problems in the L1 blockchain. Side chains, state channels, etc. belong to the L2 solution.

2. Performance differences

• Transaction processing speed: L1 blockchain is limited by factors such as consensus mechanism, and transaction processing speed is relatively slow. For example, Bitcoin processes a block in an average of 10 minutes, and the transaction processing volume per second is limited. The L2 expansion solution can significantly improve transaction speed through different technical means, such as some side chains can handle thousands of transactions per second.

• Throughput: The throughput of L1 blockchain has an upper limit under the existing technology, and it is difficult to meet the high-frequency trading needs of large-scale commercial applications. The L2 expansion solution greatly improves the overall throughput by transferring some transactions to off-chain processing and then summing up the results to L1.

3. Security

• L1 blockchain: Security is based on its own consensus mechanism, such as Ethereum's proof of stake mechanism, which ensures the security of the ledger through the participation and verification of a large number of nodes. Tampering with ledger data requires extremely high costs.

• L2 extension: Security depends on the anchor relationship with L1. L2 anchors key data and status to L1, protecting itself with the help of L1's security. However, L2 itself also has some security risks, such as smart contract vulnerabilities.

4. Cost

• Transaction cost: L1 Blockchain requires complex processes such as consensus verification when processing each transaction, and transaction fees are usually high. When the Ethereum network is congested, the handling fee for a regular transaction can be as high as a few dollars or more.

• L2 expansion solution: reduces transaction costs by reducing direct operation on L1. For example, state channel technology, most transactions are conducted off-chain and only interact with L1 at the final settlement, which greatly reduces the handling fee.

5. Data Availability

• L1 Blockchain: All transaction data is stored on the blockchain, and nodes can fully acquire and verify ledger data. The data availability is high, but this also leads to an increase in storage costs.

• L2 expansion solution: Some data may be stored off-chain. Although it reduces the storage pressure of L1, data availability may occur. For example, some side chains require specific methods to be fully obtained.

6. Decentralization degree

• L1 blockchain: pursues a high degree of decentralization, and ensures the fairness and resistance to attack through the distribution and participation of a large number of nodes. The power between nodes is relatively balanced.

• L2 expansion scheme: to some extent, partial decentralization may be sacrificed. For example, some side chains may be handled by a few validator nodes, which is less decentralized than L1.

7. Compatibility

• L1 blockchain: Different L1 blockchains have poor compatibility, such as the ledger structure and consensus mechanism of Ethereum and Bitcoin, making it difficult to interact directly.

• L2 expansion solution: It is usually designed for a specific L1 blockchain and has better compatibility with the corresponding L1. However, there are also problems with compatibility between different L2 expansion solutions, and additional technical means are needed to achieve interaction.

8. Development difficulty

• L1 Blockchain: Developing L1 Blockchain requires deep technical accumulation, involving many fields such as consensus algorithms, cryptography, and distributed systems. It is difficult to develop and has a long cycle.

• L2 expansion solution: It is relatively easy to develop because it is based on the existing L1 blockchain, and developers can use L1's infrastructure to focus on solving specific expansion problems.

9. Application scenarios

• L1 blockchain: suitable for applications with extremely high security and decentralization requirements, such as digital currency issuance, core financial transactions, etc.

• L2 expansion solution: It is more suitable for high-frequency and low-value trading scenarios such as in-game asset trading, small payments, interactions in social networks, etc.