Layer one assets are the native cryptocurrencies or tokens that reside directly on a foundational blockchain network, such as Bitcoin (BTC) on the Bitcoin blockchain or Ether (ETH) on the Ethereum blockchain. These assets are fundamental to the operation of their respective networks, often used for transaction fees, staking, or governance. They represent the primary value store and utility within their native layer-one protocol.
Context
The state of layer one assets is often viewed as a primary indicator of the health and adoption of their underlying blockchain. A key discussion involves their long-term value proposition relative to assets on layer-two solutions, particularly concerning scalability and transaction costs. Future developments include upgrades to existing layer-one protocols, such as Ethereum’s transition to proof-of-stake, which can significantly alter the economic characteristics and demand for their native assets.
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