Layer 1 Blockchain Development Explained Most Fully

The difference between Layer 2 and Layer 1 is getting smaller and smaller.

Layer 1 blockchains can often generate large sums of money from token sales and can also garner significant support to compete with Ether; however, the tools available in the marketplace are struggling to keep up with rapidly changing user needs, and the core infrastructure is still a block browser, wallet, developer tools, and (tested) smart contract code. The Layer 1 blockchain is able to attract users through token incentives, but as Rollups increase the scalability of Ether, the differences between Layer 2 and Layer 1 are becoming smaller.

Layer 1 blockchain ecosystem resource comparison

If we want to compare development and build tools for Web3 applications, the first issue that might be of concern is that many Layer 1 blockchain ecosystems have very large amounts of available funding, such as.

  1. Solana recently received a $314 million investment co-led by a16z and Polychain.
  2. Dfinity later announced another developer ecosystem program of up to $223 million.

In addition, significant “wealth” from initial token sales is a major source of funding for these Layer 1 projects. For example.

The Web 3 Foundation owns 30% of the initial token allocation for the Polkadot DOT – worth $7.5 billion at current prices.

Over time, most token allocation models have been standardized, essentially: about 1/3 of the tokens are allocated to the project’s core development team, 10-20% are allocated to investors prior to the public offering, and the rest is reserved for the public offering and ecosystem rewards.

In the early days of blockchain development, bitcoin distribution was considered “fair” in that miners were incentivized according to consensus mechanisms (although there weren’t many bitcoin miners in the early stages other than Satoshi Nakamoto), but now the token distribution model seems to have changed, somewhat similar to how startups distribute equity, with early ecosystem participants (such as developers and investors) often receiving developers and investors, for example) tend to get a higher percentage of the incentive. In contrast, Ether, EOS and Cardano all released a large number of tokens (over 80% or more) in the early stages of the project.

The chart below illustrates the early token allocation percentages for the Layer 1 blockchain, and it is important to note that in many cases, token incentives for the early Layer 1 blockchain ecosystem were allocated to early developers and platform project parties, such as.

  1. The NEAR protocol has a token allocation model where 11.7% of the tokens are allocated to the early ecosystem and 17.2% of the tokens are used for community grants.
  2. The Polygon protocol is more closely aligned with the ethereum community, and they retain 35% of the tokens for ecosystem and pledge (Staking) incentives.
Layer 1 Blockchain Development Explained Most Fully

Top image from: The Block Research

Layer 1 Blockchain Developer Comparison

Capital is not a scarce resource when it comes to navigating the blockchain ecosystem. Instead, projects compete for developers through incentives and a unique vision of the popularity of a given platform. Technical details are often overrated and the business development aspect is instead more important.

Blockchains typically have two technical arguments for developers to build outside of ethereum.

  1. increased scalability (transaction throughput)
  2. different governance and security models

In terms of scalability, the easiest way to scale a blockchain is to increase the validator requirements (and thus reduce the number of validators) to get additional transaction throughput. This has the disadvantage of reducing decentralization.

Another approach is through horizontal scaling, often called “sharding” – that is, dividing the network into multiple parts and going through a number of processes to determine how to select/reallocate validators between environments, the consensus mechanism for each shard, and the global state. At one end of the sharding system, there is the Ether 2.0 or NEAR protocol approach with a global set of validators that are shuffled between shards.

1, Avalanche and Polkadot offer more customizability in the way each subnet is designed by customizing the validator set.

2、Cosmos maximizes blockchain autonomy, where each connected chain is responsible for managing its own security – the protocol does not have a global view of security.

3、Solana aims to maximize a vertical, single composable blockchain scaling approach through software and hardware architecture optimization.

Layer 1 Blockchain Development Explained Most Fully

For developers, the sharding approach means that decentralized applications are synchronous and composable within the same sharding chain, while cross-sharding communication is asynchronous (slower). This poses a limitation for building DEX aggregators like 1Inch to compare prices across trading venues and make atomic exchanges at the best price.

One criticism of the sharding approach is that when scaling a decentralized data layer by sharding, the scalability benefits are limited. Whereas Layer 2 scaling using Rollups can achieve higher transaction throughput on top of the blockchain, composability is again limited to a single Rollup chain and cross-Rollup communication is asynchronous.

It may be difficult to understand why any application should leave (or be deployed outside of) Ether. After all, Ether is still the most secure and longest running smart contract platform available, all other protocols/applications are on Ether, and the blockchain is arguably the most decentralized. A common reason for building on another chain than Ether is the high cost of transactions, but Compound founder Robert Leshner has stated “[Gateway] is not a scaling tool.”

Supporting an application-specific blockchain “gateway” like Compound may be more about its sovereignty. Moreover, it could be a harbinger of a shift in the balance of power between Layer 1 blockchains and the protocols built on them.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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