Layer 1 Blockchains as the 'Infrastructure' of Web3.0
Since the advent of Bitcoin, numerous blockchains have emerged. While Bitcoin primarily serves as a platform for financial transactions, platforms like Ethereum and Solana now also function as foundations for blockchain-based applications. These blockchains host a variety of Web3.0 services, including DeFi (Decentralized Finance), NFT services, and applications known as dApps.
In Web3.0 services, the role of blockchain is to authorize and complete transactions involving cryptocurrencies and NFTs, or token acquisitions in games, encompassing all related processes. Blockchains are central to the backbone of Web3.0 services. Often referred to as 'infrastructure,' they are akin to the power generation and transmission systems for electricity, or the purification facilities and piping for water.
However, global blockchains like Ethereum face common challenges. As they become more widespread, the increase in transaction-heavy dApps, such as DeFi and gaming, leads to delays and rising transaction fees (gas costs) on a single blockchain. High fees for small cryptocurrency transactions or slow processing in games can significantly degrade user experience, posing a critical issue for service providers.
Building new blockchains requires immense resources. Constructing infrastructure from scratch while ensuring high security can lead to financial losses due to hacking.
One solution to these problems involves implementing additional blockchains on the mainnet to share transaction processing, thereby reducing the load. This system allows users to enjoy benefits such as faster transactions and lower gas costs. In blockchain terminology, the mainnet is commonly referred to as 'Layer 1,' while the supporting blockchains that handle transactions are called 'Layer 2.' Layer 2 is built on Layer 1, offering significant advantages in terms of security and developer collaboration.
From the perspective of smart contracts, Layer 2 also offers benefits. Smart contracts are programs that automatically complete transactions based on predefined rules, facilitating 'intermediary-free' transactions, a key feature of blockchain. As Web3.0 services diversify, new types of smart contracts become necessary for financial services involving cryptocurrencies, apps for implementing DAOs, and more, differing from the services available at the inception of blockchain.
While adding smart contracts not originally included in Layer 1 can be time-consuming, implementing them along with Layer 2 allows for optimized processing for new services.
Although Layer 2 blockchains offer many advantages, building a global project on Layer 2 is not necessarily a shortcut to launching Web3.0 services.
Essentially, the role of Layer 2 is to perform certain processes on behalf of Layer 1, processing and returning transactions received from Layer 1. For example, 'Polygon' is a Layer 2 blockchain developed to utilize Ethereum's security benefits while being better suited as a gaming platform.
This division of roles means that while Layer 2 can enhance transaction speed and reduce gas costs, optimizing security to suit Layer 2's conditions is not feasible. This backdrop underscores the demand for blockchain initiatives originating from Japan.
Japanese blockchain projects are being developed with various applications in mind. By focusing on security-first Layer 1 development primarily by Japanese companies, these projects align with local regulatory conditions while optimizing Layer 2 for service-specific needs, balancing both domestic considerations and usability. Here, we introduce noteworthy Japanese blockchain initiatives.
column Differences Between Layer 1 and Layer 2
Layer 1
Represented by Ethereum, Layer 1 serves as the foundation for Web3.0 services, handling core functions like block generation and transaction verification. However, as transaction volumes increase, delays can occur on Layer 1 alone.
Layer 2
By executing and processing Layer 1 transactions on a separate blockchain, Layer 2 maintains the credibility of Layer 1 while improving processing speed and reducing gas costs, thus supporting Layer 1.
