Difference Between Layer 1, Layer 2 in Blockchain

In Blockchain, every transaction on a decentralized system will go through several steps. This requires more time and processing power, to increase Blockchain handling capacity, developers brought In Blockchain layer scaling. Scaling in Blockchain is used to describe the increase in system throughput measured in the number of transactions per second. This Blockchain layer is necessary for maintaining network stability, logging, integration, and more. Currently there are 3 general uses of the term in Blockchain, namely Layer 1, Layer 2, and Sidechain. How are they different and how do they work?

Security refers to a blockchain protocol's defense against hackers and network attacks, while decentralization refers to the meaningful distribution of computing power and consensus across the network. Both are considered non-negotiable for blockchain network operations. Scalability, or the ability of a blockchain network to accommodate high transactional flows and future growth, is also important. Scalability is critical because it is the only way for blockchain networks to compete fairly with legacy, centralized platforms that offer fast settlement times. This new generation of blockchain and scaling solutions designed specifically to address transaction capacity issues is rapidly expanding the boundaries of blockchain scaling and making significant progress. Scalability is addressed in three ways in these projects:
This blockchain layer emerged as a result of a condition called the blockchain scalability trilemma (Scalability Trilemma or Blockchain Trilemma). This term was first introduced by the founder of Ethereum, Vitalik Buterin. In the Scalability Trilemma, blockchain project developers have to rack their brains to optimize and balance three main aspects of blockchain, namely decentralization, security, and scalability. It's just that developers can't get all three at once. They have to give up the reliability of one aspect so that the other two aspects can run optimally.
For example, it is impossible for developers to achieve high decentralization, high security, and large transaction scalability at the same time. So, they are caught in the dilemma (or in this case trilemma) of selecting only one or two properties they want to maximize. The existence of Scaling in the three layers is able to answer the problems in the Scalability Trilemma.
  

Layer 1

Layer 1 is the blockchain in a decentralized ecosystem, while Layer 2 protocols are third-party integrations that can be used with Layer-1 blockchains. Layer-1 blockchains include Bitcoin, Litecoin, and Ethereum, for example. To increase scalability, layer 1 solutions complement the base layer of the blockchain protocol. A number of approaches that directly improve the scalability of blockchain networks are now being developed — and put into practice.
How does it work?
The "implementation layer" of a blockchain, which deals with the actual blockchain architecture, is often referred to as layer 1 of the blockchain. Crypto assets connected to the blockchain are stored in this layer. At this base layer, there are other activities connected to consensus functionality and procedures. Bitcoin, Ethereum, and Solana are examples of layer 1 blockchains. Due to the Scalability Trilemma, Layer 1 blockchains are often flawed. Blockchain, for example, may be decentralized and secure, but its scalability is very limited. Therefore, it is not surprising that existing blockchain networks have scalability that cannot accommodate global data exchange flows. Even if they want to concentrate on the scalability aspect at the beginning,
Layer 1 Use Cases
Layer 1 changes protocol rules directly to increase transaction capacity and speed while supporting more users and data. To increase total network throughput, layer 1 methods may include increasing the amount of data contained in each block or speeding up the rate of block validation.
To reach Layer 1, other core modifications to the blockchain include:

• Consensus protocol improvements: Certain consensus techniques are more efficient than others. Proof of Work (PoW) is the current consensus protocol for major blockchain networks such as Bitcoin. Although PoW is safe, it is time consuming. That is why the Proof-of-Stake (PoS) consensus mechanism is preferred by many newer blockchain networks. PoS systems process and validate new blocks of transaction data based on participants staking collateral in the network, rather than requiring miners to solve cryptographic algorithms with significant processing power.
• Sharding: Although somewhat experimental in nature within the blockchain sector, Sharding is a technology borrowed from distributed databases that has become one of the most popular Layer 1 options. Sharding divides the state of an entire blockchain network into separate databases known as “shards,” making it easier to manage than having all nodes maintain the entire network. The network processes these network shards in parallel, enabling sequential processing of large numbers of transactions.

‍

Layer 2

A network or system that runs on top of an underlying blockchain protocol to increase its scalability and efficiency is referred to as Layer 2. This type of scaling solution involves offloading some of the blockchain protocol's transaction weight to an adjacent system architecture, which then performs most of the network processing and simply reports back to the main blockchain to complete the process. Base layer blockchains become less crowded and ultimately more scalable by abstracting much of the data processing to additional architecture.
How does it work?
Beyond the original blockchain, second layer blockchain networks are referred to as second layer solutions or (off-chain) blockchain protocols. This blockchain network is a protocol that sits on top of the layer 1 blockchain network and handles the first layer blockchain. scalability issues. In general, the “load” of scalability will be shared between the first and second blockchain layers. The second blockchain layer will then process transactions that would otherwise be the “burden” of the first blockchain layer. As a result, blockchain scalability can be improved, and transaction costs can be reduced. 
This second layer blockchain does not only refer to an off-chain network that handles scalability aspects only. Because, the nickname second layer blockchain also refers to all protocols or networks that function to fix interoperability problems or add other features on top of the main blockchain network.
Layer 2 Use Cases
Lightning Network is a Layer 2 solution designed to increase transaction speed on the Bitcoin network in this way. Layer 2 solutions can also be found at:

• Nested Blockchain: A nested blockchain is a blockchain that resides within or more precisely, on top of another blockchain. Nested blockchain architectures typically consist of a primary blockchain that sets parameters for the larger network, with execution occurring across a network of interconnected secondary chains. On the main chain, multiple blockchain tiers can be created, each with its own parent-child links. The parent chain assigns the work to the child chain, which processes it and then returns it to the parent. Unless explicitly stated, the underlying blockchain does not participate in the network functions of the subsidiary chains.
• State channels: State channels increase total transaction capacity and speed by enabling two-way communication between the blockchain and off-chain transactional channels. State channels do not need to be validated by Layer-1 network nodes. Instead, it is a network-adjacent resource that is protected through multi-signature mechanisms or smart contracts. The final “state” of a “channel” and all its inherent transitions are posted to the underlying blockchain when a transaction or set of transactions is completed on the state channel.