Beginner Series #5: Understanding Blockchain Layers: L1s and L2s Made Simple

Welcome to my 5th and final edition of 0xfarmed Beginner Series Newsletter!

In our previous editions, we learned about Blockchain technology, How Do Cryptocurrencies Work and What is Consensus, public vs private blockchains, if you have not checked them out or need a refresher check out the links below.

Today we're diving into the different types of blockchains and how they work together. Think of it like a city's transportation system - we have main highways (Layer 1) and local roads (Layer 2) working together!

Layer 1 (L1): The Foundation

Think of Layer 1 blockchains as the main highways of the crypto world. These are the base networks that handle everything on their own.

A Network is a connection of nodes that share data. As an example, 100000 random users across the world install an ethereum node on their computers and form a virtual network on which transactions can be validated, that is what a blockchain network is.

Here's another analogy to help you understand: think of blockchains as different companies like Coke, Pepsi, and Dr Pepper. They all produce carbonated drinks, but their flavors and user preferences vary.

Popular L1 Examples:

1. Bitcoin

   • The first and most famous blockchain

   • Focused on being digital money

   • Like a super-secure digital vault

2. Ethereum

   • Like a giant computer

   • Can run apps and smart contracts

3. Solana

   • Built for speed

   • Can handle lots of transactions

4. Other popular L1’s

   • Avalanche, Cardano, Polkadot, Cosmos, BNB (Binance) ,Near etc.

Layer 2 (L2): The Helper Networks

Layer 2s are like local roads that connect to the main highways. They help make transactions:

• Faster ⚡

• Cheaper 💰

• More efficient 🎯

Popular L2 Examples:

1. Lightning Network (for Bitcoin)

   • Makes Bitcoin transactions super fast

   • Perfect for small payments

   • Like express lanes on a highway

2. Optimism ,Arbitrum , Base, Polygon zkEVM, Starknet (for Ethereum)

   • Help Ethereum handle more transactions

   • Lower fees

   • Like bypass roads around a busy city

Real-World Analogy: The Pizza Delivery System

Think about ordering pizza:

• L1 (Main Kitchen): Where the pizza is made

• L2 (Delivery Drivers): Help get the pizza to more people faster

Why Do We Need Both Layers?

1. L1 Challenges:

   • Can get crowded

   • Sometimes expensive

   • Might be slower

2. L2 Solutions:

   • Reduces traffic on L1

   • Makes transactions cheaper

   • Speeds things up

Simple Practice Exercise 🎯

Imagine sending $10 to a friend:

1. L1 Direct: Like taking the highway during rush hour

2. L2 Route: Like taking a shortcut through local roads

Which would be:

• Faster?

• Cheaper?

• Better for small transactions?

Key Terms to Remember 📚

• L1 (Layer 1): Main blockchain networks

• L2 (Layer 2): Helper networks that make L1s better

• Scaling: Making blockchain faster and cheaper

• Transaction Fee: Cost to use the network

Safety Tips! ⚠️

1. Different layers have different security features

2. Always research which layer suits your needs

3. Start with small transactions to learn

Think About This 🤔

1. Why might someone choose to use an L2 instead of L1?

2. What types of transactions work best on each layer?

3. How do these layers work together to make blockchain better?