𝐖𝐡𝐚𝐭 𝐚𝐫𝐞 𝐋𝟏 & 𝐋𝟐 𝐂𝐫𝐲𝐩𝐭𝐨𝐬?

You’ll often hear people talk about Layer 1’s and Layer 2’s in crypto. It sounds technical, but it’s very simple.


𝐋𝐚𝐲𝐞𝐫 𝟏: 𝐓𝐡𝐞 𝐅𝐨𝐮𝐧𝐝𝐚𝐭𝐢𝐨𝐧

Layer 1’s are the main blockchains. They process transactions directly, handle security, and maintain decentralisation. Everything runs at this base layer. Think of them like the main roads of a city. Every transaction moves directly on these roads.


𝐄𝐱𝐚𝐦𝐩𝐥𝐞𝐬:

$BTC $ETH (Ethereum) 
$ADA
 SOL
 AVAX 
$XRP 
$HBAR (Hedera Hashgraph)


𝐋𝐚𝐲𝐞𝐫 𝟐: 𝐒𝐜𝐚𝐥𝐢𝐧𝐠 𝐎𝐧 𝐓𝐨𝐩

As some Layer 1’s grow, they start to face congestion, slow speeds and high fees. That’s where Layer 2’s come in.

Layer 2’s sit on top of Layer 1’s to help scale the system. They handle transactions off-chain, then settle them back later. It allows the network to run faster and cheaper.

𝐄𝐱𝐚𝐦𝐩𝐥𝐞𝐬:
$ARB (Arbitrum)

MATIC (Polygon)

Base (built on Optimism tech, backed by Coinbase)

OP (Optimism)


𝐑𝐢𝐬𝐤𝐬 𝐰𝐢𝐭𝐡 𝐋𝟐𝐬:
From an investment perspective, most L2’s face one major problem: they’re competing for the same solution.

→ Most rely on Ethereum as the base chain.
→ Many offer similar scaling benefits.
→ Technology moves fast so it's even more easily replaceable.
→ If Ethereum upgrades successfully (and fully scales), some L2’s could lose relevance.
→ A few may dominate, but most won’t survive long term.


That’s why I approach L2’s more as short term narrative trades, not core long term investments. The stronger foundation usually sits with the Layer 1’s in my opinion.

A big week ahead with FOMC as well. I will continue to keep everyone updated 👩🏻‍💻☕️