Key Takeaways:
- Layer-1 (L1) blockchains are the foundational protocol layer where core rules and consensus mechanisms are defined.
- Responsible for validating transactions, L1s create new blocks and maintain overall network security. Examples of L1 blockchains include Bitcoin, Ethereum, and Cronos.
- Layer-1 tokens represent the native cryptocurrency of their respective blockchain networks, facilitating transactions, paying for transaction fees, and serving as the medium of exchange within the ecosystem.
- L1 tokens also play a significant role in network governance, allowing token holders to propose and vote on protocol changes. Staking is another key use, providing rewards and contributing to network security.
- The most popular Layer-1 projects in 2024 include Bitcoin, Ethereum, Solana, Cronos, Cardano, Avalanche, Cosmos, Bitcoin Cash, NEAR Protocol, and Sui.
- Read on for a step-by-step guide for buying L1 tokens on Crypto.com.
What Is a Layer-1 Token?
A Layer-1 (L1) blockchain is the fundamental protocol layer of the blockchain’s architecture where the core rules and consensus mechanisms are defined. Examples include Bitcoin, Ethereum, and Cronos.
This foundational layer is responsible for validating transactions, creating new blocks, and maintaining the overall security and integrity of the blockchain network. Layer-1 blockchains are the primary frameworks upon which decentralised applications (dapps) and other protocols can be built.
Common consensus mechanisms for L1 blockchains are Proof of Work (PoW), as seen in Bitcoin, and Proof of Stake (PoS), used in Ethereum. These mechanisms ensure that transactions are verified and validated in a decentralised manner. L1 blockchains also implement a native cryptocurrency, which acts as the network’s fuel, facilitating transactions and incentivising network participants.
Scalability is a critical consideration for L1 blockchains. As blockchain usage increases, the demand for higher throughput and lower latency grows. To address these challenges, L1 blockchains often explore various scaling solutions, such as sharding, sidechains, and new consensus algorithms. While Layer-2 protocols typically focus on off-chain scaling to reduce the load on L1s, the core blockchain layer remains essential for security, consensus, and interoperability.
What Are Layer-1 Tokens Used For?
Layer-1 tokens are primarily used to facilitate transactions and operations within their respective blockchain networks. These tokens often represent the native cryptocurrency of an L1 blockchain (i.e., BTC for the Bitcoin blockchain; ETH for the Ethereum network).
Users require these tokens to pay transaction fees, which incentivises network participants (miners or validators, respectively) to process transactions and create new blocks. L1 tokens also serve as the medium of exchange within the ecosystem, allowing users to send funds, execute smart contracts, and engage with dapps.
Beyond transactions, L1 tokens often play a significant role in network governance. Many L1 blockchains implement governance mechanisms that allow token holders to propose and vote on protocol changes, shaping the future development of the network. For example, holders of the Tezos (XTZ) token can vote on proposed protocol upgrades, influencing the blockchain’s direction.
Additionally, some L1 tokens can be used for staking, where users lock their tokens to participate in the consensus process, help in securing the network, and earn rewards. This staking mechanism is integral to PoS blockchains, such as Cardano (ADA) and Ethereum.
Most Popular Layer-1 Tokens in 2024
Bitcoin
Bitcoin is the L1 blockchain that pioneered the concept of cryptocurrency. Its native token, BTC, is used primarily as a digital currency and store of value. Bitcoin operates on the PoW consensus mechanism, where miners use computational power to validate transactions and create new blocks. The network is designed to be secure and resistant to censorship, making it a popular choice for peer-to-peer (P2P) transactions and a hedge against inflation.
In 2024, spot Bitcoin exchange-traded funds (ETFs) were approved for the first time in the US, which led to billion-dollar inflows into Bitcoin’s market cap and BTC’s price reaching a new all-time high (ATH).
Ethereum
Ethereum is a prominent L1 blockchain known for its smart contract capabilities and support for a vast range of dapps. Its native token, Ether (ETH), is used to pay for transaction fees and execute smart contracts.
Ethereum’s network runs on a PoS consensus mechanism, allowing users to stake their Ether to validate transactions and earn rewards. The platform’s flexibility and support for a wide range of dapps make it a leading choice for developers and decentralised finance (DeFi) projects.
Solana
Solana is a high-performance L1 blockchain designed for scalability and speed. Its native token, SOL, is used for transaction fees, staking, and governance. Solana employs a unique Proof of History (PoH) consensus mechanism in combination with PoS, enabling rapid transaction processing and high throughput.
While Solana has been a top-10 market cap token for many years, its impressive price gains in 2024 have made it one of the most popular choices for L1 tokens this year.
Cronos
Cronos is an L1 blockchain built on Cosmos, focusing on interoperability and supporting Ethereum-compatible applications. It also seamlessly integrates with and supports the Crypto.com ecosystem. Its native token, CRO, is used for transaction fees, staking, and governance.
Cronos aims to connect different blockchains and support cross-chain communication, allowing users to interact with a broader ecosystem of dapps and DeFi projects.
Cardano
Cardano is a research-driven L1 blockchain that emphasises security, sustainability, and scalability. Its native token, ADA, is used for transactions, staking, and governance. Cardano uses the PoS consensus mechanism, with a unique multi-layer architecture that separates settlement and computation. This design aims to provide a more flexible and scalable platform for smart contracts and dapps.
With a well-established history as one of the first blockchains that attempted to reduce cryptocurrency’s energy consumption, ADA is a household name amongst the big market cap L1 tokens.
Avalanche
Avalanche is an L1 blockchain designed for speed, scalability, and interoperability. Its native token, AVAX, is used for transaction fees, staking, and governance. Avalanche features a unique consensus mechanism that allows for multiple subnets, each with its own set of rules, providing flexibility for different use cases. This architecture supports high throughput and quick finality, making Avalanche a competitive platform for DeFi and other applications.
Cosmos
Cosmos is an L1 blockchain designed to enable interoperability and communication amongst different blockchains. Its native token, ATOM, is used for transaction fees, staking, and governance. Cosmos uses the Tendermint consensus mechanism, allowing blockchains to connect and share information. This approach creates a network of interconnected blockchains, facilitating cross-chain communication and expanding the ecosystem’s possibilities.
Bitcoin Cash
Bitcoin Cash is an L1 blockchain that emerged from a hard fork of Bitcoin, with a focus on faster transactions and lower fees. Its native token, BCH, is used for P2P transactions and as a digital currency. Bitcoin Cash employs the PoW consensus mechanism, similar to Bitcoin, but aims to improve scalability by increasing block size. This approach makes Bitcoin Cash a popular choice for everyday transactions and as a medium of exchange.
In 2024, Bitcoin’s ecosystem grew with additions like BRC-20 tokens and Bitcoin Ordinals, which also revived market participants’ interest in Bitcoin Cash.
NEAR Protocol
NEAR Protocol is an L1 blockchain designed for scalability and developer-friendly features. Its native token, NEAR, is used for transaction fees, staking, and governance.
NEAR Protocol employs a unique sharding technology, allowing the network to scale horizontally by dividing the blockchain into smaller pieces, enabling high throughput and low latency. This architecture supports a wide range of dapps and smart contracts.
Sui
Sui is an L1 blockchain created by former Facebook employees. The chain is built for high-speed transactions and low-latency smart contracts; its native token, SUI, is used for transaction fees and governance. Sui utilises a unique consensus mechanism designed for rapid transaction processing, making it suitable for use cases that require quick confirmation times. The blockchain’s focus on scalability and performance makes it an attractive option for dapps and other demanding workloads.
Sui’s innovative technology and high speed have garnered considerable interest from market participants in early 2024. Rather than processing transactions sequentially, Sui prioritises relevant data processing, resulting in expedited transaction speeds.
How to Buy Layer-1 Tokens With Crypto.com
Crypto.com offers a user-friendly platform to buy Layer-1 tokens and engage with their blockchains.
Follow these steps to buy L1 tokens on Crypto.com:
- Download the Crypto.com App and create an account.
- Complete the necessary verification process to unlock full access to the platform.
- Deposit funds into the Crypto.com account; users can utilise fiat currency or other cryptocurrencies to fund their accounts.
- Navigate to the ‘Buy’ section of the App and search for the L1 token(s) you want to buy.
- Specify the amount of tokens to acquire and review the transaction details.
- Confirm the transaction and wait for the order to be executed.
- Monitor the token holdings in the Crypto.com App, which doubles as a wallet.
Crypto.com provides a secure and reliable trading environment, ensuring that users can trade L1 tokens with confidence. Take advantage of the platform’s intuitive interface, advanced trading features, and competitive fees to make the most of your crypto trading experience.
Conclusion: Should You Buy Layer-1 Tokens?
In the rapidly evolving landscape of blockchain technology and cryptocurrency, Layer-1 projects stand as the bedrock upon which blockchain ecosystems are built.
From the pioneering Bitcoin to the cutting-edge solutions offered by projects like Solana, Cardano, and NEAR Protocol, the diversity of L1 blockchains underscores the ongoing quest for scalability, security, and interoperability. Each project brings its unique approach to addressing the challenges of blockchain technology, whether through novel consensus mechanisms, advanced smart contract capabilities, or seamless cross-chain communication.
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