Layer 1 vs Layer 2 refers to different components of blockchain scalability. Layer 1 is the base layer of the blockchain, where the main protocol, consensus mechanism, and transactions occur. Examples include Bitcoin and Ethereum. However, Layer 1 blockchains can face scalability issues due to network congestion. Layer 2 solutions operate on top of Layer 1 to enhance scalability, speed, and efficiency without altering the base protocol. Popular Layer 2 solutions include the Lightning Network and Optimistic Rollups, helping reduce transaction fees and improve throughput.
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