Layer-1 vs. Layer-2 Blockchains: What You Must Know

Bitcoin did the heavy lifting of creating a peer-to-peer decentralized and tokenized financial network. One person can send another person halfway around the world $1,000,000 in BTC for a paltry $20, sometimes even as low as a dollar and change. 

The problem is that microtransactions, such as sending a friend $4 for a cup of coffee, cost the same. 

Similarly, Ethereum created an entire galaxy of possibilities for DeFi, NFTs, and other decentralized applications. However, the breadth of its value has also been one of its detractions– as network gas fees skyrocket in times of extremely high traffic, making using the network ludicrously expensive for users and developers alike. 

CryptoKitties, an early sensational NFT game, nearly ground Ethereum’s network activity to a halt in 2018 due to the throng of transactions. Even today, gas fees can be hundreds or thousands of dollars to mint a new Ethereum-based NFT. 

However, problems are usually followed by problem solvers. Hundreds of developers have dedicated their professional lives of late to either building decentralized apps to help scale projects like Bitcoin or Ethereum or creating more scalable networks from the ground up. 

Layer-1: The underlying blockchain architecture. For example, Bitcoin and Ethereum.

Layer-2: A network that sits on top of Layer-1, which facilities network activity. For example, the Lightning Network and Raiden Network.

The following Layer-1 vs. Layer-2 blockchain guide explores both approaches and how they contrast. 

Layer-1 vs. Layer-2 Blockchains: The Basics

Layer-1 updates usually involve consensus protocol changes or sharding

As you may know, Bitcoin and Ethereum use a gawky but effective consensus protocol called Proof-of-Work (PoW). It’s good at what it does because it works. However, as network activity grows, its limitations become unbearable for many. 

PoW requires miners to solve cryptographically-difficult equations via computational power– hence Bitcoin mining facilities that are just warehouses with specifically designed computers running 24/7/365

At times, transactions can take way too long for convenience’s sake and become very expensive. Bitcoin can manage about seven transactions per second, whereas Ethereum can do 15-20. 

Proof-of-Stake (PoS) is a relatively newer protocol; rather than computation power, it relies on people (validators) staking a certain quantity of holdings to validate transactions.

Changing consensus algorithms can be a divisive ordeal, and switching from PoW to PoS on a network as large as that of Bitcoin or Ethereum would require achieving agreement among the majority of participants, which can be extremely difficult. 

Sharding is another Layer-1 scaling strategy. Sharding breaks transaction sets into smaller chunks called shards, which the network can process at a much faster rate. Think of cutting a PBJ sandwich into small pieces (shards) versus eating it bite by bite. Each small piece you eat is a finalized transaction, whereas the latter approach would require the whole sandwich to be eaten before the transactions are final. 

Attempting to implement scalability measures on a Layer-1 blockchain would require a full or partial network update, which is a slow and contentious process; if things go sideways, the entire network could face enormous damages. 

Many projects have been launched to provide users the scalability that the more legacy cryptocurrency projects have struggled to do. 

For example, chains like Solana, Cosmos, and Cardano (yet to launch anything) have emerged in attempts to unseat Ethereum as the most popular blockchain network for dApps, primarily targeting its scalability issues and low-hanging fruit. 

The user experience tends to be much faster and cheaper on the newer Layer-1s– transactions on Osmosis, a decentralized exchange built on Cosmos, cost around a penny. In contrast, the Ethereum DEX UniSwap can cost dozens or hundreds of dollars. 

However, the opportunity to scale the world’s most popular Layer-1s instead of launch new ones from the ground up is an admirable and lucrative challenge accepted by many. 

They do so through Layer-2 blockchain innovation

Layer-2: Attempts at Scalability

Layer-2s are essentially sandboxes for creativity with minimal or zero disruption to the underlying network.

There are two types of Layer-2 blockchains: state channels and nested blockchains.

A state channel allows for two participants who would otherwise interact on the blockchain to interact off the blockchain, limiting the congestion of the network. 

Imagine Bitcoin’s or Ethereum’s blockchain as a 10-lane superhighway with bumper-to-bumper traffic. A state channel would be the back-road approach you could take to avoid driving into a slow, expensive network and get to your end destination at a fraction of the time and cost. 

Here’s how state channels work: 

  1. A blockchain segment is sealed off through a smart contract or multi-signature means, where all participants agree on the conditions. Lightning Network and Raiden Network used Hashed Timelock Contracts (HTLCs) for their state channels. 
  2. The transaction participants can then directly interact without needing to submit their request to the miners on the Layer-1. 
  3. When all the transaction sets on the state channel are complete, the final state is added to the blockchain. 

So, while a transaction is technically not “final” until added to the blockchain, state channel projects like Bitcoin’s Lightning Network and Ethereum’s Raiden Network effectively carry out the role of policing and verifying transactions. 

The idea is that these “batched” transaction blocks can effectively internally settle; when they do, the entire batch is added to the blockchain. As such, Lightning Network enables fast microtransactions (low fees, fast settlement), and Raiden does the same thing for Ethereum’s broader functionality. 

However, state channels have some limitations. 

Nested blockchains aim to increase scalability exponentially, whereas state channels are more linear. 

Ethereum is a popular breeding ground for decentralized apps to solve scalability issues. OmiseGO, for example, is experimenting with a nested blockchain scaling solution called Plasma. 

In Plasma, multiple levels of specific-use blockchains sit on top of the leading blockchains in parent-child connections. The parent chain then dedicates specific work to child chains, such as a social network or decentralized exchange.

The root chain still calls all the shots and sets the ground rules, but nested blockchains relieve some load. 

Final Thoughts: What You Should Know About Blockchain Scalability

While the differences between Layer-1 and Layer-2 solutions might seem exclusively technical, it’s worth considering that by collecting NFTs, holding tokens, and using dApps, you’re the direct stakeholder in the whole ordeal. 

While Ethereum enjoys a considerable first-mover advantage for NFTs (and DeFi), boasting multi-billion-dollar dApps like OpenSea, competitors are gaining on its tail. 

As an NFT investor or creator, being aware of broader industry trends like scalability is an excellent way to keep your ear to the ground, whether that be for the purpose of finding the next BAYC (on another chain) or creating the next homerun NFT brand for a diehard layer-1 alternative. 

Top NFT-Based Trading Card Games (TCGs)

NFT-based games integrate traditional gaming concepts with blockchain technology, non-fungible tokens (NFTs), and other decentralized financial elements. 

Gamers are loving GameFi (the intersection of gaming and NFTs, and even DeFi) for three main reasons: 

  1. True ownership: While in conventional digital games, players can buy in-game assets, those assets don’t actually belong to them. On the other hand, NFT-based games give players complete control over their assets– in-game assets like cards, lands, avatars, or swords are NFTs.
  2. Verifiable rarity and uniqueness: Non-fungibility makes it possible for creators to make 100% unique tokens, as well as programming different rarity levels for the assets. Naturally, some items in games will be scarcer or more useful than others, and their value should reflect that. Since everything happens on the blockchain, it’s easy to verify the scarcity, uniqueness, and authenticity of each asset.
  • Opportunity to earn income while playing: These games implement play-to-earn mechanisms. By participating in games, players can earn cryptocurrencies and in-game items that have real-world value. Many games have their own secondary markets for trading.

NFT-Based trading card games are getting so much attention because they’re a perfect mesh for most any game genre, from role-playing games to fighting games. One of the most popular gaming categories is card trading. 

For many people, training card games, or TCGs, revive childhood memories of collectible card games while at the same time offering a new way of generating revenue.

In play-to-earn NFT-based card trading games, each card is a non-fungible token (NFT), usually in ERC-721 standards. They enable the play-to-earn mechanism using common elements found in GameFi, such as an in-game currency and a marketplace. 

Here are the top NFT-based trading card games. 

Gods Unchained

Gods Unchained is the most popular trading card game in the blockchain universe. It runs on Ethereum and Immutable X. 

Gods Unchained is a free-to-play fantasy-themed turn-based, tactical card game; players must build their decks based on a strategy. 

By playing the game, you can earn common core cards. Those cards can’t be traded on the marketplace; at this point, they are not minted on the blockchain. It’s possible to increase the value of these common cards, by earning “flux”, a resource gained by winning the ranked games.

Gods Unchained has a process called The Forge, in which players who have earned enough flux can merge two identical core cards into one by spending flux. This process creates higher-quality cards, and since the forged cards are minted on the blockchain, they can be sold on the blockchain, sometimes for a hefty profit. 

Splinterlands

Splinterlands game runs on the Hive blockchain. 

You can test the game for free, but to start playing, you need to buy a starter set for $10.You can get new cards by buying packs from the shop or individual items from other players in the marketplace. You can also sell your assets on this marketplace. 

One of the highlights of Splinterlands is its cross-compatibility with multiple blockchains, enabling users to trade their cards on several marketplaces. 

In addition to selling your cards, you can earn in Splinterlands by getting its in-game currency DEC (Dark Energy Crystals). There are a couple of ways to acquire DEC in the game. First, by winning ranked battles, and second by destroying the cards you don’t use anymore. You can use DEC to buy assets from the game’s shop.

Another way to earn on Splinterlands is renting your cards via peakmonsters.

Sorare

Sorare is a fantasy football game built on the Ethereum blockchain. 

You can collect player cards and build teams, and as with real-world trading card games, the real value comes from the most valuable player cards. Depending on the rarity of the card, it can get quite expensive.

The Sorare play-to-earn mechanism enables users to participate in tournaments, where users can earn points and rewards based on their team’s performance.

Dark Country Game

Dark Country is a trading card game on the WAX blockchain with gothic-themed characters like zombies, ghosts, and haunted Indians.

In addition to cards, players can own heroes, items, and lands as NFT assets. Players can stake Dark Country assets on rplanet.io and collect cards on collect.social to gain the platform’s Racoon tokens. 

Dark Country has a weekly forging activity similar to Gods Unchained’s The Forge called Heroes Reforge and Staking. Players need to burn four heroes of the same type in order to receive a new hero with better quality. They can then stake this improved asset to earn rewards.

Dark Country has recently introduced land assets compatible with WAX and Flow blockchains. 

With lands, several new revenue generation options will be possible soon, such as land leasing and staking the platform’s in-game currency Shadow Dime (SDM) on lands.

Final Thoughts: Emerging Exciting New TCG Projects

While some may argue that the game mechanics of most NFT-based games are primitive and “not quite there yet,” TCGs marry the simplicity of a trading card game with the blockchain very well. 

A few more exciting TCG projects to keep an eye on include:

  1. Skyweaver, a free-to-play Ethereum-based game in beta mode. Players have three grades of cards: base, silver, and gold. Base cards can’t be traded, but silver and gold cards can be. You earn silver cards via ranked rewards and conquest, and gold cards via conquest.
  2. Parallel,  a science-fiction-themed card game also based on the Ethereum blockchain. The team built its own NFT drop system. The project is currently raising funds by selling drops, which contain cards. These cards will have utilities once the game development is complete.
  3. Metropolis Origins, is a cyberpunk-themed card game by QXR Studios running on the WAX blockchain. It’s a sequel to game designer Graeme Devine’s adventure game Metropolis. The game released a founder NFT pack that enables owners to play the game in beta mode. 

The evolution of blockchain card games will be one to watch, as more implementations of conventional card games on the blockchain continue to emerge.  With NFTs’ programmable nature, we can expect to see the evolution of more dynamic, and potentially lucrative and competitive, playing card games in the near future. 

Axie Infinity: Pokémon Inspired Blockchain Game Explained

Axie Infinity is a community-driven blockchain-based digital pet game that enables players to earn money while playing the game. Think of Axie as a hybrid between Pokemon, Tamagotchi, and CryptoKitties.

It is one of the most popular NFT token-based games, with over 19,000 monthly active on-chain users. One of the most notable characteristics of Axie Infinity and other NFT-based games is that users are able to bridge the in-game economy with real-world currency.

Over 25,000 ETH (over $45M) has been traded in the in-house marketplace, with the most expensive Axie being sold for 300 ETH ($540,000.)

About Axie Infinity:

Axie Infinity is a product of Sky Mavis, a game study based in Ho Chi Minh City, Vietnam.

The Sky Mavis and Axie Infinity team includes:

Trung Nguyen, Founder of Sky Mavis and Axie Infinity. He is a serial entrepreneur behind an E-commerce delivery startup called Loship.

Alexander L. Larsen is the Co-Founder of Sky Mavis and Axie Infinity game and is the current Chief Operating Officer of the venture.  He is the business head behind the venture and handles the day-to-day operation of the company.  He comes with a background in e-sport development and is a gamer, gaming competition organizer, and video journalist.

Viet Anh Ho is the Chief Technology Officer at Sky Mavis.  He was previously a full-stack developer and an intern at both Google and Paypal.

  • Tu Doan, art director and game director of Axie Infinity. He is a competitive Pokemon player and created the entire suite of Axie game characters. He also worked on Loship with Trung.
  • Duy Trinh, Lead Animator Axie Infinity. He’s a graduate of a professional Hollywood Animation Studio and works as a freelancer.
  • Quy Dau, Primary Software Engineer. He won the 2016 React Hackathon. He started his first company at the age of 21.
  • Nam Nguyen, Chief Graphic Artist and Designer. 

Launched in 2018, Axie Infinity has quickly grown alongside the rising popularity of NFTs and blockchain-based gaming. 

The Cast of Axie Characters:

Axie Infinity is a decentralized game ecosystem built on the Ethereum blockchain, featuring a cast of digital characters. Per the game’s narrative, Axies are creatures that “love to battle, build, and hunt for treasure.” 

Dubbed a “digital nation,” Axie Infinity presents a landscape in which users can collect, battle, or breed their characters. 

The Axie secondary marketplace

Users can also build a collection of Axies and use them in a wide variety of games within the Axie Infinity world, called the “Terrarium.” 

Axies gain experience points and level up by completing daily activities or through battle with other Axies. They come with specific traits that help determine battle outcomes; some characteristics make them more competitive than others. 

There are over 500 body parts that can be acquired and traded, and each body part enables Axies to perform specific battle moves or receive an overall combat advantage. 

There are four stats that determine a battle outcome: Health (HP), Skill, Speed, and Morale.

  1. Health (HP): How much of a beating your Axie can withstand before it’s knocked down.
  2. Skill: A skill stat determines the amount of damage you do; you can do more damage if you use multiple cards on your opponent during battle.
  3. Speed: Speed is critical because it determines the attack order in a battle. The faster the Axie, the quicker the attack. Speed also comes in handy in defense; faster speeds mean your Axie has a greater chance of avoiding a critical or lethal strike. 
    1. If two battling Axies have the same speed, attack order is determined by the following stat priority: High speed > Low HP > High Skill > High Morale > Low Fighter ID.
  4. Morale: The morale score of Axie decides whether an Axie gets to make a critical strike on an opposing Axie.  It also determines when an Axies is losing whether the losing Axie gets to make a last stand.

The above stats are influenced by an Axies’ class and body parts

Axie Classes:

Axie classes are reminiscent of Pokemon types– each class has certain advantages and disadvantages in combat. Think Rock, Paper, Scissors. There are six common classes in Axies and three secret classes. 

Common Classes: Aquatic, Beast, Bird, Bug, Plant, Reptile.

Secret classes:

  • A “Mech” is a hybrid offspring of a purebred Beast with a purebred Bug Axie.
  • A “Dawn” is a hybrid offspring of a purebred Plant with a purebred Bird.
  • A “Dusk” which is a hybrid offspring of a purebred Reptile with a purebred Aquatic

Axie Advantage and Disadvantage Breakdown: 

Each class has an advantage over two other classes. Similarly, it has a disadvantage against two classes. 

Aquatic class:

  • Advantage: Bugs and Beast Axies. 
  • Disadvantage: Plant and the Reptile Axies.

Beast class: 

  • Advantage: Plant and Reptile Axies
  • Disadvantage: Aquatic and the Bird Axies.

Bird class 

  • Advantage: Bug and Beast Axies
  • Disadvantage: Plant and the Reptile Axies.

Bug class: 

  • Advantage: Plant and Reptile Axies
  • Disadvantage: Aquatic and the Bird Axies.

Plant class: 

  • Advantage: Aquatic and the Bird Axies
  • Disadvantage: Beast and the Bug Axies.

Reptile class: 

  • Advantage: Aquatic and Bird Axies
  • Disadvantage: Beast and Bug Axies.

Axie Body Parts:

Each Axie has six body parts: horns, back, tail, eyes, ears, and mouth. Each body part has the ability to play a role during battle.  Each ability is represented by a card. Only horns, mouths, backs, and tails determine what kinds of cards an Axie can use in battle.

A body part’s “class” also improves the four stats listed above: Health, Skill, Speed, and Morale. 

Axies have around 500 different body parts options, each of which look different and provide relatively unique advantages. 

The Battle is the Game Plan:

There are two ways an Axie can battle: PvE (E stands for environment) in an adventure or in 3v3 (3-on-3) battle against other Axies in an arena.

The goal for each sort of battle is to learn experience (EXP.) 

PvE adventures: For example, one PvE battle takes place in the Lunacia Ruins in the Axie Terrarium. During the PvE, an Axie will face 36 levels of monsters. Successfully navigating each level gives the Axie some experience, allowing it to perform better in the next. The Axie will have to defeat three waves of monsters (on average) in each level to advance to the next stage.

Axies can earn anywhere between 50 EXP points to over 1200 EXP points per level. The EXP varies per level and doesn’t necessarily increase or decrease: for example, Level 30 pays 1209 in EXP points, and Level 36 pays 820 points to clear.

Here is a breakdown of how many EXP points are gained for winning each level:

3v3 (3-on-3) Battles: two teams of 3 Axies each face each other in a 3×3 battlefield. 

The battle strategy generally determines the victor. An excellent plan considers the specific suitable Axies in each team, placement on the battlefield, what moves are utilized, and the order of those moves. 

The Axie with the fastest speed gets to attack first, followed by the opposing side. Each team then takes turns until all three members of one team are defeated.

The victorious party’s members each earn 60 EXPs and the defeated get 20 EXPs each. If all three opposing Axies have been defeated, their rewarded EXPs go to the winning team.

Axie Infinity & the Blockchain: How Does Axie Infinity Work?

Axie Infinity leverages the blockchain to reward and incentivize players for engagement, as well as to provide access to a secondary market in which users can sell their Axies and other in-game objects. Axis and their body parts NFTs, specifically ERC9721 tokens. The Small Love Potion (SLP) is an item used to feed Axies is an ERC-20 token. 

A token introduced at the end of 2020, the Axie Infinity Shard (AXS) is an ERC-20 token that acts as both a governance token, as well as an in-game currency that can be bought, traded, or earned by playing the game. 

Final Thoughts

 One of the most significant driving forces of Axie Infinity’s growth is its community, as dozens of reviews attest.

The community is mostly on Discord, which serves as a chat interface uniting the thousands of monthly users. As one of the most popular blockchain-based games to date, Axie Infinity has earned a first-mover advantage and dozens of long-time users.  If you’re interested in playing Axie Infinity or researching it further, check it out at https://axieinfinity.com/.

F1 Delta Time: Formula One on the Blockchain Explained

F1 Delta Time is an Ethereum blockchain-based game developed by Animoca Brands in partnership with motor racing championship Formula 1 ®. The game utilizes both Non-Fungible (NFT) and fungible tokens for its collectible items that can be used in its Racing Game. 

The Hong Kong-based multinational Animoca Brands isn’t new to the gaming industry; it has created numerous popular games, and is the exclusive distributor of CryptoKitties in China. 

The Collectible game contains NFTs for rare virtual items like Cars, Drivers, Racing Components, and Trinkets for collecting and trading.

Delta Time began auctioning NFTs for the game’s rarer items like cars annually beginning in 2019. 

Rare NFTs on F1 Delta TimeL

There are five unique and official Formula 1® NFTs of the “Apex” rarity level:

  1. The Landmark “1-1-1” digital car collectible was sold on May 28th, 2019 for a record price of $113,000. 
  2. Formula 1 France Edition 2019 was sold on July 15th, 2019 for $25,000  
  3. The “China Edition 2019 Azure Dragon” was sold on January 31st, 2020 for 509 ETH
  4. Formula 1 Grand Prix de Monaco 2020 1A was sold on December 2nd, 2020 sold for $223,000.
  5.  F1® Delta Time’s Apex digital car “Bahrain Edition 2020” was sold at auction for US$77,414 on December 4th, 2020.

Packaged NFT Tokens:

F1 Delta Time started selling collections of NFTs combined in its “Crates” from February 25th, 2020 to March 9th, 2020. 

According to its official press release, Crates “contain a randomized assortment of collectibles. A crate can contain driver gear, car components, and tires, as well as a chance of a car or driver collectible, with the car and driver collectibles being the rarest drops available from crates.”

The NFTs consist of collectible tokens based on Ethereum’s ERC-721 standard, and exist in both car and driver categories. Each Crate consists of a car, a driver, and three other related NFTs.

The company released the following categories and quantity of Crates, going from most common to the rarest in left-to-right columns:

The company further revealed that each Crate would have five items. The Crates are assembled according to the rarity of the NFT token and Crate price as follows:

A lucky buyer might find an NFT token above its case pricing to hype up the sale.  So, for example, a ‘Rare’ crate buyer could find one item in their crate that is ranked as ‘Epic.’

The Crates are priced from $20 – $500, ranging from Common to Legendary.

 

The Epic and Legendary Crates contain official F1® drivers and cars from the 2019 Formula 1 Season.  

The cars and drivers on the Common and Rare levels are original cars and drivers exclusive to F1® Delta Time, but not the ones from formal Formula 1 seasons.

There are also secondary NFTs that can attach to primary NFTs. For example, an NFT of a glove, boot, or helmet could attach to a driver NFT, which will impact that driver’s performance in a race. 

Similarly, some NFTs attach to the car NFT, such as fenders, throttles, or side mirrors. Each item can be associated with a particular race car, and also impact that car’s performance in the Racing game. 

The fungible token, designed as an ERC-20 token is called REV, which acts as a currency for race day activities.  

Users can use the REV token as a currency to pay for game entry fees to races, or to purchase collectible items at the races. As a currency, REV tokens may increase or decrease in value due to being staked in the race. 

The race may reward players with REV if the car they risked their REV on shows good performance at a race. 

The Racing Game: 

The F1® Delta Time Grand Prix™ announced Phase 1 of the action-based racing game on December 16th, 2020, with the event running from December 17th, 2020 to December, 21st 2020.

Phase One was open to all players, provided they had a car, a driver, and tires to compete– all NFTs to be purchased on the platform. 

The first phase was the qualifying round. Players ran qualifying laps to decide their starting position according to their times in practice with the fastest car upfront. 

Emulating real-world Formula 1 races, players would have to meet some of the benchmarks to compete in future races or to compete one-on-one with other drivers.

The First Phase of the F1 Delta Time Grand Prix was held in the Circuit de Monaco.  There are four tiers in the racing circuit at Monaco, namely A, B, C, and D.  Each racing participant receives 80 free attempts for Phase 1, which can be utilized to try out 20 times in each of the four tiers mentioned above.

The races have four different kinds of race weather, hot, dry, light rain, and heavy rain.  Each player is required to try out each weather combination in each tier. After the qualifying round, the winner of each weather and tier combination will be added to the Leaderboard—this way, a total of 16 entries will be announced for the Leaderboard for Circuit de Monaco.

Future phases will include additional locations of Spa-Francorchamps, Silverstone, and Monza.

Rewards:

The total prize pool will be 100,000 REVs.  

Players with the fastest overall times for each tier will win REVs as a reward per the position achieved. The players with the fastest times in the tier and weather combination will win the 2020 Key Trinket.

The players that have the fastest lap times overall, regardless of the weather factor, will win REVs per the following cart:

In addition to the REVs won, the top three performers in each tier with the fastest lap times overall will win a REV trophy along with the prize money in REVs.  This way, a total of 12 trophies will be distributed along with a total of 100,000 REVs.

At the lap speed level, drivers with the fastest individual laps combined with weather and tier will get 2020 Game Keys.  Drivers can still win a key for the fastest lap in their weather and tier combination even if they didn’t achieve the fastest overall speed. There will be a total of 68 Keys awarded in this phase as per the following chart per their position:

Final Thoughts:

Formula 1 is one of the most-watched and most admired motorsports in the world.  Hosted in 21 countries across five continents with television viewership of over 1.5 billion people, Formula 1 has over 500 million die-hard fans worldwide. Its race attendance tops over four million (in non-COVID times, of course.)         

Animoca Brands has brought this mainstream sports to the Blockchain platform to combine the mainstream world of racing with the blockchain-based world of virtual collectibles.