What is Layer-1? What are Layer-1 Projects?

Blockchain Layers and Definition of Layer-1

Blockchain systems usually consist of multiple layers. The layers perform different tasks to optimize the functioning of the network and serve more users. Layer-1, or layer-1, is the most basic of the layers and can be described as follows: It is the main protocol layer where all transactions of a blockchain network take place and are verified. Projects like Bitcoin and Ethereum are examples of Layer-1. Layer-2 is like an add-on that enhances the functionality of Layer-1. In particular, Layer-2 solutions come into play to increase processing speed and prevent network congestion and slowness. 

Consensus Mechanisms of Layer-1 Projects

Proof of Work (PoW) 

Proof of Work is a method applied in pioneering projects such as Bitcoin that ensures network security by solving mathematical problems. Miners generate a hash value from block headers using cryptographic hash functions such as SHA-256, and continuously perform nonce checks to ensure that this value is below a target set by the network. PoW promises strong security but falls short on scalability with high energy consumption and long processing times.

Proof of Stake (PoS) 

Proof of Stake has been adopted in projects like Ethereum as an environmentally friendly and efficient alternative. In PoS, users earn the right to become a validator by locking a certain amount of cryptocurrency. These validators are used for block creation and validation, provided they are randomly selected by the algorithm. PoS offers faster transaction times while reducing energy consumption, but the disproportionate influence of large coin holders on the network has been criticized.

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Delegated Proof of Stake (DPoS) 

Delegated Proof of Stake is a consensus mechanism in which users select validators. Coin holders select representatives to act as validators, and these validators take turns generating blocks. DPoS is preferred in projects such as Binance Smart Chain to increase transaction speed, but it has limitations in terms of decentralization.

Proof of History (PoH) 

Proof of History (PoH) is an innovative consensus mechanism used in scalability-focused blockchain projects such as Solana. PoH uses cryptographic timestamps to prove the sequence and authenticity of transactions, greatly optimizing the transaction verification process. By enabling parallel transaction verifications, PoH is capable of handling thousands of transactions per second, which makes it ideal for areas such as financial applications, decentralized exchanges and gaming platforms that require high transaction volumes. 

Proof of Staked Authority (PoSA)

Proof of Staked Authority (PoSA) is a hybrid consensus mechanism. It aims to increase efficiency by combining the PoS and DPoA models. Validators are selected by staking a certain amount of cryptocurrency and execute block creation processes. While the limited number of validators speeds up transactions. While sacrificing decentralization, PoSA is an ideal solution for commercial applications with scalability and low transaction costs.       

Pure Proof of Stake (PPoS) 

Pure Proof of Stake, an innovative consensus mechanism, relies on the principle of randomness in the process of verifying transactions and generating blocks, ensuring that all users in the network can be potential validators. A cryptographic ranking protocol is used to randomly select validators, eliminating the possibility of the network being controlled by a particular group or individual. While users' chances of being selected as a validator depend on the amount of cryptocurrency they hold, the process is completely random, so it does not have a disproportionate impact on large asset holders. 

Layer-1 Coin and Project Examples

Bitcoin (BTC)

Bitcoin is the first example of blockchain technology, in other words, the beginning. Operating with the PoW consensus mechanism, the Bitcoin network prioritizes security and decentralization. However, this prioritization results in reduced transaction speed and increased energy consumption. 

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For more information about Bitcoin, visit bitcoin.org

Ethereum (ETH): Layer-1 Protocol Based on Smart Contracts

Ethereum is the first Layer-1 project to support smart contracts. By allowing developers to create decentralized applications (dApps), Ethereum revolutionized the blockchain ecosystem. Ethereum's transition to the PoS mechanism was made to increase the scalability of the network.  

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For more information about Ethereum, visit ethereum.org

Binance Smart Chain (BSC): High Speed and Low Cost

Binance Smart Chain (BSC) is a Layer-1 network developed by Binance. It offers transaction speed and low cost advantages. BSC uses a hybrid consensus mechanism called Proof of Staked Authority (PoSA). One of the most important features of BSC is that it supports decentralized finance (DeFi) applications and has a large ecosystem. Popular exchanges like PancakeSwap run on BSC. BSC's transaction fees are lower compared to Ethereum. 

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For more information about Binance Smart Chain, visit bscscan.com

Cardano (ADA): Research-Based Advanced Blockchain

Cardano is a Layer-1 blockchain network based on scientific foundations. Its developer, Charles Hoskinson, is also one of the founders of Ethereum. When creating Cardano, he aimed to create a more secure, scalable and sustainable ecosystem. The most notable feature of Cardano is its use of a unique Proof of Stake (PoS) mechanism called Ouroboros. Unlike other blockchain projects, Cardano's development process was shaped by scientific papers and peer reviews.

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For more information about Cardano, visit cardano.org

Solana (SOL): High Throughput Layer-1 Protocol

Solana is a Layer-1 protocol that has made an impact in the blockchain world in terms of speed and scalability. The Solana network is capable of approximately 65,000 transactions per second. This fast transaction speed challenges the current limitations of blockchain technology. A major factor behind Solana's success is its innovative consensus mechanism called Proof of History (PoH). PoH allows the network to run faster by sequencing transactions with timestamps.

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For more information about Solana, visit solana.com

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Other Featured Layer-1 Projects: Avalanche, Polkadot, Tezos, Algorand

Avalanche (AVAX): A Layer-1 blockchain network focused on high speed, low cost and scalability. One of the most important features of Avalanche is that it provides flexibility to application developers by supporting multiple sub-chains. These sub-chains can be customized for different use cases.

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Polkadot (DOT): Polkadot is a Layer-1 protocol that connects different blockchain networks. This connection facilitates the sharing of data and assets between blockchains. The most notable feature of Polkadot are the sidechains called parachains. Parachains work in an integrated way with the main chain by increasing scalability.

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Tezos (XTZ): Tezos uses the Proof of Stake mechanism and has an environmentally friendly structure. Its most important feature is that it is self-updating. The flexible structure of the network has made it especially preferred for financial applications and NFT projects.

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Algorand (ALGO): Algorand, which offers speed and security together, has a consensus mechanism called Pure Proof of Stake (PPoS). In Algorand, all users are able to participate in network management.

Advantages and Disadvantages of Layer-1 Blockchains

• High Level of Security: Layer-1 blockchains are highly secure thanks to consensus mechanisms that work directly on-chain. Robust and tested protocols such as Proof of Work (PoW) ensure that transactions are resistant to manipulation. 
• Independence: Layer-1 blockchains operate without dependency on any upper layer. For example, Ethereum's Layer-1 structure allows smart contracts and decentralized applications (dApps) to run directly on the network. 
• Comprehensive Ecosystems: Layer-1 networks have a thriving ecosystem. For example, Ethereum's infrastructure underpins applications used in decentralized finance (DeFi), NFT markets, and gaming. 
• Decentralization: Layer-1 blockchains, especially Bitcoin, adhere strictly to the principle of decentralization. 

• Low Transaction Speed and Scalability: One of the biggest drawbacks of Layer-1 blockchains is that transaction speeds decrease when network density increases. Bitcoin and Ethereum, for example, can experience slowdowns during peak periods due to limited transaction capacity. 
• Energy Consumption: Layer-1 blockchains, especially those using the Proof of Work (PoW) mechanism, are criticized for their high energy consumption. The annual energy consumption of the Bitcoin network exceeds the total energy consumption of some small countries. 
• Development and Maintenance Costs: Layer-1 blockchains require high development and maintenance costs due to their complex infrastructure. Network updates, forks, and additions of new features are often time-consuming and expensive. 
• The Trade-off between Decentralization and Performance: Layer-1 blockchains attempt to strike a balance between decentralization and transaction performance. Strengthening the decentralization of the network often negatively impacts transaction speeds and scalability. 

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