Recent data shows that 58.5% of all Ethereum transactions across the network were processed via Layer 2 solutions instead of the main blockchain layer in 2025. This figure shows how activity concentration on the network has changed, raising questions about whether it’s better to invest in base protocol (Layer 1) or scaling networks (Layer 2) when allocating crypto capital.
Understanding how each layer operates and which investment exposure is possible becomes even more important as usage patterns and network functions change. Investors will be able to make informed decisions when knowing how each layer operates, which can highlight potential exposure opportunities.
Confidence vs. Potential
Choosing to invest in Layer 1 or Layer 2 options isn’t an either/or decision. It depends heavily on exposure appetite, intuitions about the potential ways ecosystems can evolve, and the investment horizon. Layer 1 investments appeal to those who prefer infrastructure plays with greater resilience and staying power but less extreme upsides in the shorter term. Layer 2 networks provide more growth potential if adoption continues to grow at its current rate.
For example, Bitcoin is the Layer 1 investment option, which doesn’t see extreme upsides anymore. However, investors have a long history of strong performances that make them feel confident enough to put their crypto capital into the pot. Meanwhile, btc hyper is only in the pre-sale stage now, and it has the potential to explode once it hits the mainstream market.
The Layer 2 solution promises cheaper Bitcoin transactions and the potential for explosive growth by exposing investors to dApps, staking, and meme coins. It also has extensive documentation that investors can access through the whitepaper, allowing them to make decisions based on forecasts, but investment could lead to extreme upsides shortly after the solution launches. Understanding how each layer works may reveal more reasons to side with confidence or potential when choosing Layer 1 or 2 investments.
Layer 1 Defines the Base Protocols
Layer 1 describes the basic blockchain protocols used by Solana, Ethereum, Bitcoin, Cardano, and Avalanche. These networks handle block production, consensus mechanisms, and native token transactions. They provide the groundwork for all other transactions to occur on blockchain networks. There are over 300 Layer 1 networks, with Bitcoin having over 460,000 daily active wallets and Ethereum having 420,000. A more recent Layer 1 network called Sui has over 800,000 daily active users as the new blockchain exceeds expectations.
Layer 1 solutions have distinct architectures, security, speed, developer, and decentralization ecosystems. For instance, Avalanche enables custom “subnets” to specialized chains, while Solana uses the Proof-of-History (PoH) mechanism to process high numbers of transactions every second. Ethereum has made various improvements to the base layer to deliver better throughputs and sharding so that it handles more load. Ultimately, Layer 1 refers to the base ecosystem or network on which all other systems and transactions occur, which are often Layer 2 solutions like smart contracts and dApps.
Layer 2 Provides Network Scaling
Layer 2 solutions and protocols are designed to operate on top of existing base networks or Layer 1 chains. Research confirms that Layer 2 protocols have successfully reduced costly gas fees and sped up throughputs to deliver faster transaction speeds. These top-layer solutions often divert workloads away from the primary chain to reduce congestion and user costs while they remain anchored in the base layer’s security protocols.
Common Layer 2 protocols include rollups, sidechains, and state channels. For example, zk-Rollups actually bundle hundreds of transactions off the main chain before sending a single proof back to ease the network load. The increased speed and lower fees allow applications that normally battle on the main chain to use micropayments, incentivized gaming, and micro-remittances for practical utility and a greater chance of scalable potential.
The Confidence in Layer 1 Protocols
Layer 2 networks have expanded, but Layer 1 protocols remain the foundation of the entire ecosystem. The established confidence alone warrants investment consideration using trusted fintech investment apps. Older layers offer established market trust, wide developer support, and better liquidity. The tokens provide foundational infrastructure exposure.
For example, Ethereum’s blockchain provides the basis for thousands of smart contract transactions daily, with thousands of dApps and developers relying on the foundational protocols. Bitcoin also maintains a solid market cap, while newer solutions like Solana and Avalanche already aim for higher throughputs and executions to provide some alternatives in the major protocol investment market.
Layer 1 tokens also carry lower volatility compared to early-stage Layer 2 options. They’re less dependent on wider adoption, and the risk lies more in how the network maintains security, decentralization, and performance as the volumes increase. Competing protocols could steal market share, but the ultimate reward of Layer 1 investments is that they’re more stable as the foundational networks allow all Layer 2 tokens to thrive.
The Potential of Layer 2 Networks
Layer 2 networks have a greater potential for growth. Ethereum settling more than half of its transactions using Layer 2 protocols already shows the possibilities behind the investment opportunity because the networks promote real-world utility. Token economics connected to Layer 2 protocols could generate meaningful and explosive returns as adoption expands, including the wider use of staking, lower transaction fees, and advanced governance rules.
Layer 1 provides the basic tokenization capabilities for diverse portfolio investments like fractional property ownership, but Layer 2 also allows this model to scale as the transactions happen cheaper and faster, which matters in frequent transactions in newer investment opportunities like real estate deals. Developers are also starting to prefer Layer 2 protocol applications because of the higher throughput numbers and lower fees.
Meanwhile, the infrastructure requirements are much lower because Layer 2 tokens already use existing chains. This welcomes more people to use the network protocols, which only increases the chance of wider adoption and everyday utility. Investing in Layer 2 tokens increases investment exposure with the potential for explosive growth as they rely more on utility compared to core blockchains.
Conclusion
The best approach to any investment strategy is to diversify a portfolio. Investors should consider putting capital in both Layer 1 and 2 solutions to spread exposure and reduce any risks. Layer 1 investments are driven by existing market confidence, but Layer 2 opens investors up to opportunities that may bring massive returns if adoption continues for that specific token. Investing in the new Hyper presales could be an attractive option because it taps into potential through new applications, but also confidence in the base Bitcoin chain.
