Crypto Level 1 and Level 2 Solutions: Performance, Security, and Adoption

KEY TAKEAWAYS

• Layer 1 blockchains provide foundational security and decentralization, but are limited in scalability, often handling low TPS (e.g., 7–30) and charging higher fees during congestion.
• Layer 2 answers scale by offloading transactions off-chain, achieving thousands of TPS, near-instant speeds, and reduced costs while inheriting Layer 1 security through proofs and settlement.
• The scalability trilemma is addressed synergistically: Layer 1 optimizes for security and decentralization, while Layer 2 enhances performance, enabling mass adoption without compromising core guarantees.
• Adoption is shifting heavily toward Layer 2 for daily use cases such as DeFi, gaming, and payments, with projections showing significant user growth and a 2026 increase in transaction volume.
• Hybrid models combining Layer 1’s robust foundation with Layer 2’s efficiency represent the future, as no single layer can fully optimize all three trilemma aspects alone.

ETH co-founder Vitalik Buterin introduced the , which states that a blockchain can optimize for only two of three factors: decentralization, security, and scalability. Layer 1 blockchains prioritize security and decentralization, but they sometimes sacrifice speed and throughput. 

are protocols that are implemented on top of Layer 1 networks to handle processing.  This improves performance without compromising the integrity of the foundation layer. This layered strategy enables more transactions, lower costs, and broader use while maintaining strong security foundations.

Learning About Layer 1 Blockchains

Layer 1 is the leading blockchain network that handles essential tasks like processing transactions, reaching consensus, and finalizing transactions. These independent networks validate transactions directly on the blockchain, making them highly secure and decentralized.

Layer 1 blockchains use diverse ways to reach agreement. For example, BTC uses Proof of Work (PoW), which relies on mining that consumes a lot of energy to keep the network secure. ETH will switch to Proof of Stake (PoS) in 2022, making the network more efficient through staking. Delegated and Practical Byzantine Fault Tolerance (pBFT) are two other ways to do this.

Design decisions that prioritize security limit performance on Layer 1. BTC processes about 7 TPS, and ETH processes between 15 and 30 TPS. This causes congestion, high fees during peak times, and delays finality.

BTC (for settling value), ETH (for smart contracts), Solana (for high-throughput games and memes), and other networks like Plasma (for payments with sub-second finality) are all examples.

Security is still a large difficulty, with decentralization making it hard to attack, and there is no single point of failure. But this makes it harder to scale, which makes it harder for high-volume apps to be widely used.

What Layer 2 answers Do and How They Work

Layer 2 answers are built on top of Layer 1 to make scaling easier by processing transactions off-chain or in batches, then settling summaries or proofs on the foundation layer. They solve the trilemma by outsourcing execution while maintaining Layer 1’s security.

There are many diverse forms, such as rollups (optimistic, presuming validity with fraud proofs, or zero-knowledge, using cryptographic proofs), sidechains (independent with bridges), and state channels (peer-to-peer off-chain, like the for BTC micro-payments).

There are significant performance improvements: Layer 2 lets you process thousands of TPS (up to 10,000+ in some cases), get confirmations almost instantly, and pay much lower fees via batching. For example, Arbitrum and Base, which are built on ETH, can handle many transactions at once and incur only a small fee compared to the mainnet.

Layer 1 is where security comes from, and proofs or bridges ensure it stays that way. Over 98% of is still tied to Layer 1; bridging adds some minor concerns. Trade-offs could lead to centralization among sequencers or operators, but the paradigm could yield a valuable blockchain for everyday transactions, gaming, DeFi, and payments, potentially leading to widespread adoption.

Comparing Performance: Costs, Speed, and Throughput

Layer 1 emphasizes finality and immutability, but struggles with speed and cost under heavy traffic. The mainnets for BTC and ETH are getting crowded, with fees rising and TPS remaining low (for example, ETH at 15–30 TPS). 

Layer 2 makes measurements much better: rollups aggregate transactions to generate larger throughput, usually 40–50 TPS or more per chain, and combined ecosystems aim for 10,000+ TPS. 

Fees go down significantly (for example, gaming fees drop by 74% across various L2s), making and real-time apps possible. Users think L2 is quicker because confirmations happen rapidly, even though the final settlement occurs on L1 within a few minutes.

This difference in performance leads to changes in activity: L2 handles day-to-day volume, while L1 focuses on settlement.

Models of Security and Trade-offs

Layer 1 has built-in security because it uses native consensus and is highly decentralized (for example, ETH has more than 500,000 Block confirmers, making 51% attacks unlikely). It offers battle-tested resistance without additional layers. Layer 2 gets this security from proofs, data available on L1, or bridges, and it maintains strong assurances. 

Most of the activity on L2 is linked to ETH or BTC. But off-chain parts come with trade-offs, such as the possibility of sequencer centralization or bridge fragilenesses.

Analyses show that L1 is better at decentralization and security, while L2 sacrifices some minor features for scalability while still maintaining overall trust through L1 anchoring. Hybrid approaches mix L1’s base with L2’s speed.

Trends in Adoption and What to Expect in the Future

More and more, adoption favors layered structures. has grown at an incredible rate, with user bases expected to reach millions of active addresses and TVL skyrocketing in ecosystems like ETH’s rollups. L2 handled most transactions in 2025–2026, with some reports suggesting about 2 million daily transactions. This is twice as many as on the mainnet, thanks to DeFi, gaming, NFTs, and payments.

Layer 1 is still essential for settlement, with ETH acting as a liquidity anchor and Solana for high-performance niches. L2 is more cost-effective for businesses and institutions, whereas L1 is securer because it follows the rules.

The ecosystem is moving toward complementarity: L2 drives widespread adoption, and interoperability and UX improvements will keep the ecosystem growing by significant amounts. Layered methods enable greater blockchain integration by addressing scalability without sacrificing security.

FAQs

What is the main difference between Layer 1 and Layer 2 blockchains?

Layer 1 is the base network handling consensus and security independently, while Layer 2 builds on it to improve scalability through off-chain processing.

How do Layer 2 answers improve performance over Layer 1?

They batch or process transactions off-chain, enabling higher TPS (up to 10,000+), quicker confirmations, and much lower fees compared to congested Layer 1 networks.

Does using Layer 2 compromise security?

No, most Layer 2 security is anchored to Layer 1 (over 98% in many cases), though minor trade-offs exist in areas like bridging or sequencer centralization.

Why has Layer 2 adoption grown so rapidly?

It addresses real-world barriers such as high fees and sluggish speeds on Layer 1, enabling applications in gaming, DeFi, and payments for broader user accessibility.

Will Layer 1 become obsolete as Layer 2 grows?

No, Layer 1 remains crucial for settlement, final security, and decentralization; Layer 2 depends on it and complements rather than replaces it.

References

• Layer 1 vs Layer 2 vs Layer 3: Blockchain Layers Explained |
• Layer 1 vs. Layer 2: The Difference Between Blockchain Scaling answers |