What is the Genesis Block and Why is it Important?
April 23, 2025
By Amirhossein Mousavi
Blockchain Strategist & Innovation Manager
When we talk about blockchain, Ethereum often comes to mind as one of the most popular and widely-used platforms. One of the key components behind Ethereum’s success is its Ethereum Virtual Machine (EVM). This powerful system allows for the execution of smart contracts and decentralized applications (dApps). But as blockchain adoption grows, so do the challenges—specifically, scalability. Ethereum and other Layer 1 blockchains sometimes struggle to handle a large number of transactions quickly and affordably, which is where Layer 2 solutions come into play.
Layer 1 Blockchains: The Backbone
A Layer 1 blockchain is the base blockchain network. It’s where everything starts—transactions, smart contracts, and decentralized applications. Ethereum itself is a prime example of a Layer 1 blockchain.
Think of Layer 1 like the main highway in a city. It’s a fast, secure, and immutable route for transactions, but when there are too many cars (or transactions) at the same time, the traffic slows down, and the cost of using that highway increases. In the blockchain world, this leads to higher transaction fees and slower speeds. Ethereum’s gas fees (transaction fees) are a prime example of this congestion.
For instance, if you were to buy an NFT on Ethereum during a busy period, the gas fee could sometimes be higher than the price of the NFT itself! It’s frustrating for users, and it’s clear that Layer 1 blockchains need a solution to scale effectively.
Layer 2 Solutions: Scaling the Blockchain
Enter Layer 2 solutions—these are protocols built on top of Layer 1 blockchains to help scale and improve performance. Think of Layer 2 like building new lanes or highways to reduce congestion on the original road.
For example, imagine you want to send money to a friend through a mobile app, but instead of processing the transaction through Ethereum directly, it’s done on a Layer 2 network, where it’s faster and cheaper. Once the transaction is complete, it’s then settled back on the Ethereum blockchain.
Some popular Layer 2 solutions for Ethereum include:
- Optimistic Rollups: These solutions process transactions off-chain and only submit essential data back to Ethereum. It helps reduce congestion and speed up transactions.
- zk-Rollups: These use advanced cryptography (zero-knowledge proofs) to bundle multiple transactions into a single one, offering even better scalability and lower fees.
- State Channels: This allows users to make multiple transactions off-chain with just one final settlement on-chain, making it ideal for high-frequency transactions.
For example, zk-Rollups have already been used in applications like DeFi, where users can execute many transactions without worrying about high fees, all while keeping the security of Ethereum intact.
How the EVM Plays a Key Role
The Ethereum Virtual Machine (EVM) is the heart of Ethereum and other Ethereum-compatible blockchains. It is where the magic happens—the place where smart contracts are executed, and dApps run. The EVM provides the environment for developers to write code that interacts with the blockchain.
The beauty of the EVM is its compatibility with both Layer 1 and Layer 2 solutions. This means that developers don’t have to completely change their code when transitioning from Ethereum’s base layer to a Layer 2 solution. Whether it’s zk-Rollups or Optimistic Rollups, developers can still use the same codebase, and the security and functionality of Ethereum are maintained.
A Real-World Example:
Let’s take an example. Imagine you’re using a decentralized finance (DeFi) app to borrow some tokens. If the app only used Layer 1 Ethereum, the gas fees might be so high that borrowing becomes impractical. But with a Layer 2 solution, you can perform the transaction quickly and at a much lower cost, while still having the security of Ethereum’s blockchain backing it up.
In practice, Layer 2 solutions have enabled applications like Uniswap, a decentralized exchange, to scale massively without sacrificing the core principles of decentralization and security.
Conclusion: The Future of Blockchain
The future of blockchain lies in the combination of Layer 1 and Layer 2 solutions. As the blockchain ecosystem matures, Layer 2 will become increasingly important for enabling scalable and efficient systems. The Ethereum Virtual Machine will continue to play a critical role in this evolution, allowing developers to build with both security and scalability in mind.
Blockchain is no longer just an experimental technology—it’s rapidly becoming a tool that will power industries across the globe. Whether you’re a developer or a business, understanding the relationship between Layer 1 and Layer 2 is crucial for building and scaling decentralized applications.
Thank you for reading the post. I am Amirhossein Mousavi, a Blockchain Strategist with years of experience in blockchain technology and innovation. If you have any questions about this post, or if you’d like to get in touch with me to discuss how blockchain can benefit your business, don’t hesitate to reach out. You can contact me directly, and I’ll be happy to share more insights.
