Layer 1 (L1)
Quick Answer
Layer 1 is the base blockchain network (Ethereum, Bitcoin, Solana) that processes and finalises transactions independently, providing security guarantees for higher layers.
Full Definition
Layer 1 refers to the base blockchain network — the foundational protocol that processes and finalises transactions independently. Examples include Ethereum, Bitcoin, Solana, and BNB Chain. Layer 1 blockchains provide the security and consensus guarantees that all higher layers rely on. In crypto payments, Layer 1 networks handle the actual settlement of transactions, though many payment providers route through Layer 2 networks for lower costs and faster confirmations.
Related Terms
Layer 2 (L2)
Layer 2 is a protocol built on top of Layer 1 to improve scalability and reduce fees. Networks like Polygon, Arbitrum, and Base reduce costs to fractions of a cent.
Liquidity
Liquidity is the ease with which crypto can be traded without affecting its price. Deeper liquidity means better exchange rates and less slippage during payment settlement.
Liquidity Pool
A liquidity pool is a smart contract with paired token reserves enabling decentralised swapping, providing the on-chain liquidity for payment settlement conversions.