If you have been looking into blockchains technology and cryptocurrencies for the past few years, you’re probably heard the terms layer 1 and layer 2 more than once. Whether you’re an investor actually putting time into where to allocate your capital, a developer pondering where to build your next dApp, or just a mildly invested crypto nerd who wants to sound cool at the dinner party, the layer 1 vs. layer 2 discussion is relevant. In 2025, this debate has only grown louder. Ethereum still dominates much of the developer and DeFi ecosystem, but Solana, Avalanche, and other Layer 1s are pushing boundaries. Meanwhile, Layer 2s like Arbitrum, Optimism, zkSync, and Base are scaling Ethereum in ways that seemed almost impossible just a few years ago. So, which will you choose? Layer 1 or Layer 2? Let’s dig deeper. What Are Layer 1 Blockchains? A Layer 1 blockchain is the base layer, or protocol, which transaction is recorded digitally on the network. Examples of layer 1s include Bitcoin and Ethereum. All activity happens “on-chain”, with either miners or validators validating it on the blockchain, which records every transaction. Layer 1s provide: Examples of Layer 1s in 2025: Again, we should think of Layer 1 as the “main highway.” Every car (transaction) goes on the same highway, and the overall network decides how to manage traffic. What Are Layer 2 Blockchains? A Layer 2 blockchain that sits on top of Layer 1 for the purpose to add improvements to scalability, efficiency, or cost. Instead of competing with the base layer, it extends it. The most notable example: Ethereum Layer 2s. Gas fees on Ethereum were prohibitive to the point simple swaps were costing $100+. This gave rise to Layer 2s. Types of Layer 2s: Layer 2 is like adding express lanes to the main highway. Cars move faster, but still anchor their legitimacy to the main Layer 1 road. Why the Distinction Matters in 2025 Here’s the reality: blockchain adoption is growing beyond DeFi and NFTs. Supply chain systems, gaming, RWAs, CBDCs, and corporate sustainability credits are starting to utilize relatable public or hybrid blockchains. This demand gives rise to the following three friction points: That’s why the Layer 1 vs Layer 2 conversation isn’t just academic. – it outlines where businesses and developers and investors are going to build and deploy real applications. The Case for Layer 1 Pros Cons Real-World Example In the 2021 bull run, when Ethereum users were paying over $200 per transaction at the height of congestion, it no longer made sense for the casual user and developers were forced to explore other networks. Some left for Solana (fast, cheap), others waited for Ethereum’s scaling roadmap to evolve. The Case for Layer 2 Pros Cons Real-World Example In 2023-2024 Arbitrum and Optimism saw huge growth in TVL (total value locked with billions of liquidity in DeFi). Coinbase even launched Base, a Layer 2 chain on Ethereum, subsequently legitimizing L2s as more than experimental… they were now the default scaling strategy for Ethereum. Layer 1 vs Layer 2: Which Is Better The real answer is not one is universally “better“, it’s about fit for purpose. Hybrid Approaches: The Future Is Multi-Layered By 2025, we will predominantly see hybrid models developed: This means you don’t really have to choose strictly one way or the other. Developers are designing and building with modularity in mind, utilizing Layer 1 security, and Layer 2 scalability. Final Thoughts The rise of Layer 1 vs Layer 2 blockchains isn’t a war with a clear winner. It’s more like the evolution of the internet itself. In the early days, websites had to choose between dial-up and DSL. Today, we take broadband for granted. Similarly, in the future, users won’t ask, “Am I on L1 or L2?” They’ll just expect apps to be fast, cheap, and secure. The best builders and investors today will anticipate that reality and position themselves accordingly. So, if you’re asking: Layer 1 or Layer 2? The smarter answer is: both — strategically, depending on your needs. FAQs on Layer 1 vs Layer 2 Blockchains 1. What is the difference between Layer 1 and Layer 2 blockchains? Layer 1 blockchains are base networks that processes and secures transactions directly (e.g.: Ethereum, Solana, Bitcoin). Layer 2 blockchains are scaling solutions built on top of layer 1 blockchains that improve the speed and cost of transactions, while Layer 1 still secures the transaction. 2. Is Ethereum a Layer 1 or Layer 2? Ethereum is a layer 1 blockchain, however it has many layer 2 solutions on top of it to help with the scaling and reducing gas fees. (e.g.: Arbitrum, Optimism, zkSync) 3. Why do we need Layer 2 blockchains if Layer 1 exists? Layer 1 blockchains often suffer from scalability issues, such as high gas fees and low throughput. Layer 2 blockchains and solutions allow for improved scalability and reduce costs for the user by processing transactions offchain or in batches. 4. Which is more secure: Layer 1 or Layer 2? Layer 1 blockchains are generally more secure since they validate everything on-chain. Layer 2 blockchains get their security from the layer 1 blockchain they are built on, however there can sometimes be vulnerabilities in the infrastructure and bridges around them. 5. Are Layer 2 blockchains the future of Ethereum? Yes. Ethereum’s roadmap is heavily dependent on scaling with layer 2 rollups, ideally Ethereum will act as a settlement layer, while most user activity happens on Layer 2. 6. Which is cheaper: Layer 1 or Layer 2? Layer 2 blockchains are much cheaper. A swap on Arbitrum might cost a few cents, and on Layer 1 Ethereum the same swap could cost a few dollars especially during peak times. 7. Should I build my dApp on Layer 1 or Layer 2? It depends on what you are trying to do. If you need max security and liquidity choose a Layer 1 like Ethereum. If you need fast, low-cost transactions – think
The worldwide push toward sustainability has thrust carbon credits into the heart of corporate and governmental Climate change fighting plans. Yet today’s carbon credit markets are plagued by issuers trading in opacity, double counting, and suboptimal validation. Here is where blockchain can help. We are utilizing blockchain to symmetrize carbon credits; tokenizing, storing and trading of them on a registries – making such credits theoretically traceable, and significantly slashing shady practices on the carbon market, effectively enabling businesses of any size to buy, sell, or retire these without encountering bureaucratic or financial barriers. This guide will take you through the steps to create a blockchain carbon credit platform, as well as demonstrate projects that are already doing it, and answer the big questions we hear most. Why Use Blockchain for Carbon Credit Platforms? But before we get into how to build a carbon credits platform, we should discuss what makes blockchain such a great tool for managing carbon tokens: Step 1: Define the Platform Objectives Begin by determining whom you are creating the platform for and what problem it solves. Here are a few possible goals:- Also, consider what type of network you want to use: Will it be a public blockchain such as Ethereum, Polygon, or BNB Chain, or will you opt for a private or consortium chain with limited access? Step 2: Choose the Right Blockchain Architecture Scalability, cost, and adoption are dictated by blockchain architecture. Options include: EVM-Compatible Chains (Ethereum, Polygon, Avalanche) : Excellent for interoperability & smart contracts. Famous for its strong smart contract functionality and large development community, Ethereum is a public blockchain. Scalability and transaction speed are the ones that bother people when using it, since it provides transparency/shared ledger and decentralization. Private Permissioned Chains (Hyperledger Fabric, Quorum) : For Governments and enterprises who are interested in control. Hyperledger Fabric is a blockchain framework intended for enterprise applications that offers a modular architecture. It provides private transactions and confidential contracts, perfect for businesses who want to protect sensitive data. Its scalability and support for pluggable consensus mean that organizations can adapt the system to their own requirements. Corda: Designed for financial institutions, Corda is a permissioned blockchain with a focus on privacy and transactions directly between parties. Because of its special consensus mechanism, relevant parties could access transaction records for the purpose of enhancing the privacy protection. Step 3: Tokenize Carbon Credits Carbon credits must have a digital form to be traded on blockchain. Tokenization transforms each of the verified credits (which is usually 1 ton of CO₂) into a digital asset: ERC-20 tokens : To fungible carbon credits (This is for the purpose of general trading). ERC-721 NFTs : Unique credits paired w/ certain projects & complete with metadata (project location, details about the project, verification docs). Example: You have a reforestation project in Brazil which generates 10,000 credits, you now have 10,000 NFTs with geo-tagging + verification documents. Benefits of Tokenization: Step 4: Build Core Platform Modules For an effective carbon credit blockchain platform, we required a few important modules: Carbon Credit Issuance Module Marketplace & Trading Exchange Registry & Retirement System Verification & Compliance Tools User Wallet Integration Step 5: Integrate Smart Contracts Smart contracts are contracts with terms written directly into code. In carbon credit trade, smart contracts are able to automatize the operations concerning the release, transfer, and retirement of carbon credits through predefined conditions. The automation of these processes reduces intermediary intervention, transaction costs, and time as well. A business looking to offset its emissions, for example, might negotiate a smart contract which automatically buys the necessary credits when certain constraints are met (which simplifies the process and guarantees that the business remains in compliance). Smart contracts are the Lego bricks of automation: This eliminates intermediaries and reduces costs. Step 6: Add Transparency Features In order to gain trust, platforms have to provide an easy way for the stakeholders to verify the credits. Transparency features include: Step 7: Ensure Scalability & Security Scalability is important as potentially thousands of credits could be issued per day. Security measures: Step 8: Launch & Onboard Stakeholders Once the platform is ready: Real-World Examples of Blockchain Carbon Platforms These examples show the growing adoption of blockchain in climate solutions. Benefits of Blockchain-Based Carbon Credit Platforms Transparency & Trust Efficiency & Automation Global Accessibility Cost Reduction Real-Time Tracking Enhanced Market Liquidity Inclusive Participation Regulatory Compliance & Auditability Data Integration with IoT & AI Boosting Corporate Sustainability Reputation Cost of a blockchain-based carbon credit platform development It is an expensive proposition to create a sophisticated carbon trading system. The final price depends on the location of your development team, the functionality of your platform, the blockchain you pick and whether or not you. It’s easy to become bogged down in the weeds of pricing, however, be it a white label carbon credit platform, or a customized one-of-a-kind project built from the ground up. Prices can vary from $60,000 for standard platforms to over $200,000 for comprehensive solutions. Conclusion The carbon credits market can be revolutionized by blockchain technology, which can make it transparent, less convoluted, efficient, and fraud-proof. From tokenized credits, to facilitating frictionless trading across the globe, blockchain-based platforms guarantee trust and scalability in combating climate change. We at TechAroha are professionals in providing customized blockchain solutions including carbon credits platform, tokenization infrastructure and ESG solutions. We integrate sustainability with state-of-the-art blockchain technology to enable businesses, governments and NGOs to create the climate markets of the future. FAQs: Blockchain Carbon Credit Platforms What is a blockchain-based carbon credit platform?A digital platform based on blockchain technology for financing of carbon credits and withdrawal of those from trading with traceability and full transparency. How does tokenizing carbon credits work? Every credit is then tokenized into a digital token (fungible ERC-20 or NFT ERC-721) and is a crypto-certificate of 1T of CO₂ removed or avoided. Why build carbon credits on the blockchain and not traditional registries? Facilitate global access independently through Blockchain; it is double
