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L1 is the base blockchain with fixed throughput — Ethereum: 12–30 TPS, $1–$50 per transaction. L2 processes transactions off-chain and settles proofs on-chain — Arbitrum: $0.01–$0.50, 40,000 TPS. Use L1 for maximum security and high-value settlement. Use L2 for high transaction volume, consumer apps, and cost-sensitive users.
Layer 1 Basics
Layer 1 (L1) is the foundational blockchain protocol — the source of security and consensus. Every L1 has a fixed throughput determined by its block size and block time.
Key L1s
- Ethereum L1: 12–30 TPS, $1–$50 per transaction, highest security and composability, 12-second soft finality
- Bitcoin: 3–7 TPS, $1–$50, most secure chain, only basic scripting (not Turing-complete)
- Solana: 2,000–5,000 TPS, $0.00025 per transaction, fastest major L1, minor security trade-offs
- Avalanche: 1,000–4,500 TPS, sub-2-second finality, EVM-compatible
Layer 2 Basics
L2s process transactions off the main chain and submit compressed proofs or state summaries to L1. They inherit L1's security while providing dramatically higher throughput and lower costs.
Key L2 Types
- Optimistic rollups (Arbitrum, Optimism, Base): Assume transactions are valid; fraud proofs can challenge within a 7-day window. ~4,000 TPS, $0.01–$0.50, full EVM compatibility.
- ZK rollups (zkSync Era, Starknet, Polygon zkEVM): Cryptographic proof of validity submitted to L1. Faster finality than optimistic. $0.001–$0.10. EVM compatibility varies.
- Validiums (Immutable X): ZK proofs + off-chain data availability. Near-zero cost for NFT operations. Slightly weaker security than full rollup.
Decision Guide
- Use L1 when: Maximum security is required (institutional DeFi, high-value settlement), composability with existing L1 DeFi protocols is essential, you are building smart contracts that other protocols will call.
- Use L2 when: User transaction volume is high and gas cost must be sub-dollar, consumer app where UX requires fast, cheap transactions, gaming or NFT application where every interaction must be affordable.