What is the difference between a Layer 1 and Layer 2 Blockchain?
One key thing to note about layer 2s is that they are not always a blockchain; they are a “secondary” or “side-chain” that runs on top of a layer 1 blockchain. We prefer to call them Layer 2 “frameworks” or “protocols”. An example of a Bitcoin L2 is Lightning Network.
Layer 2s come in all shapes and flavors, but they usually do the same thing: take a transaction’s computation off the Layer 1 chain, but periodically post the results of those transactions back to the Layer 1 for the ultimate record. Usually Layer 2s post transactions in batches (instead of one by one) to save on costs.
The key difference between an L1 and L2 is that the L1 blockchain is a platform that allows users to create and manage decentralized applications while a Layer 2 is an extension of a Layer 1 blockchain that enables users to scale their applications by adding additional features and functionality.
Layer 1 blockchains are typically slower and more expensive than Layer 2s. Layer 2s emerged as a solution to the scalability problem faced by many L1 blockchains. By adding an extra layer of functionality, an L2 allows for the scaling of applications.