- Also called First Layer or Main Chain.
- The main blockchain of a crypto network. Became a term when Sidechains started to exist. Transactions are being done on-chain.
- Since scaling issues started to happen, people have started talking about Layer One and Layer Two solutions. Layer One is the main chain and usually is about on-chain scaling.
- Layer Two is about sidechains or off-chain scaling.
- An example is BTC Core with the Lightning Network as a Layer Two to help scale. And 32mb blocks on Bitcoin Cash as a Layer One solution.
- 0x is trying to solve the scaling problem by using ZK-snarks. They explain it as follows:
"Layer one is making the blockchain handle more work. Right now every node verifies every transaction, which means the network can only process as many transactions as its slowest node. We could require participants to have really fast computers, but then the network would no longer be open. We could make everything more efficient, but that only gets you so far. Instead, the strategy here is to stop requiring every node to verify all the transactions and instead divide the work up among the nodes. This sounds easy, but dividing work in a trustless, decentralized way is challenging.
Layer two is making the blockchain handle less work. Not every transaction needs to go to the blockchain. With some clever thinking, we can settle transactions off-chain. Payment channels are a nice example of this: I can keep a line of credit open with you where we do our payments, and only when we are done or something goes wrong do we escalate to layer one.
In short, layer two is where the transactions will happen most of the time, and layer one is always there to guarantee that everything is done correctly. Layer one doesn’t get involved unless it has to. In many ways it acts as a court to resolve conflicts in layer two."