Layer 1 blockchains are among the most important pieces of Web3 infrastructure, responsible for consensus, transaction execution, and on-chain settlement. Different L1 networks take different approaches to scalability, security, developer experience, and cross-chain interoperability, resulting in distinct value propositions for their native tokens. When evaluating Layer 1 investments, it is more important to assess real users, developers, and economic activity—and whether that activity creates sustainable demand for the native token—than to focus solely on TPS or token price.
What Is an L1 Blockchain? The Role of Native Tokens
An L1 blockchain, or Layer 1, is a foundational blockchain network capable of independently handling consensus, transaction execution, data storage, and final settlement. Bitcoin, Ethereum, Solana, NEAR, Aptos, and Sui are all Layer 1 networks built with different architectures. They can be viewed as the core infrastructure of Web3, supporting DeFi, NFTs, stablecoins, blockchain games, and other DApps that rely on the underlying network for transactions and state updates.
Most L1 blockchains have their own native tokens. Common use cases include paying gas fees, participating in Proof-of-Stake staking, helping secure the network, and taking part in governance. This distinguishes native blockchain tokens from many application-specific tokens, as they are often directly integrated into the network’s core economic and operational model.
However, growing blockchain usage does not necessarily mean the token price will rise. When assessing a Layer 1 investment, it is also important to consider transaction fees, staking, token burns, issuance, and unlock schedules to determine whether network activity translates into sustainable demand for the native token.
What Are the Main Layer 1 Blockchain Architectures?
Competition among L1 blockchains is no longer simply about “which network has the highest TPS.” Instead, it reflects different approaches to blockchain scalability.
Ethereum prioritizes base-layer security and settlement while relying on Layer 2 networks for scaling. Solana focuses more heavily on a high-performance monolithic architecture. NEAR Protocol uses Nightshade sharding to pursue horizontal scalability. APTOS and SUI both use the Move programming language but have developed different data models and parallel execution designs. Cosmos focuses on sovereign blockchains and IBC-based cross-chain communication, while Injective takes a more specialized approach by embedding financial infrastructure such as order books directly into the base protocol.
When comparing L1 blockchains, rather than asking only “Which chain is the fastest?”, it is more useful to ask three questions: What problem does the network solve? Why do users need to use it? And has its technical advantage translated into sustainable on-chain activity?
What Metrics Matter When Evaluating Layer 1 Investments?
Layer 1 investments can be evaluated across four main areas: technology, demand, tokenomics, and valuation.
- Technology: Focus on network security, validator structure, scaling mechanisms, and real-world stability rather than only peak TPS measured in test environments.
- Demand: Track active users, transaction volume, stablecoin supply, DeFi liquidity, developer activity, and leading applications. It is also important to distinguish incentive-driven short-term activity from organic user retention.
- Tokenomics: Review circulating supply, future token unlocks, inflation, staking, and fee mechanisms. Valuation should come last: even if network fundamentals continue to improve, an asset may still experience significant volatility if the market has already priced in very high growth expectations.
By comparison, backing from major venture capital firms can be a useful indicator of a project’s early-stage resources, but it should not be treated as core evidence of a blockchain network’s long-term value.
FAQ
- What is an L1 blockchain?
An L1 blockchain, or Layer 1, is a foundational blockchain network that independently handles consensus, transaction execution, data storage, and final settlement. Bitcoin, Ethereum, Solana, NEAR, Aptos, and Sui are all examples of L1 blockchains built using different technical approaches. DeFi protocols, NFTs, and DApps typically rely on these networks to operate. - What are native blockchain tokens used for?
Native blockchain tokens are commonly used to pay gas fees, participate in staking, help secure the network, and take part in governance. Because each L1 has a different tokenomic model, investors should also consider issuance, token unlocks, inflation, burn mechanisms, and network fees. - What metrics should investors consider when evaluating Layer 1 blockchains?
Key metrics include network security, active users, developer activity, stablecoin supply, DeFi liquidity, and tokenomics. Rather than focusing only on TPS, investors should assess whether the blockchain has sustainable real-world usage and whether that activity creates meaningful demand for its native token. - What is the difference between Layer 1 and Layer 2?
Layer 1 blockchains provide the underlying consensus and final settlement layer, while Layer 2 networks are built on top of Layer 1 to increase transaction capacity, often through technologies such as rollups. In simple terms, Layer 1 provides the security and settlement foundation, while Layer 2 primarily helps the underlying network scale.
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