Layer 1 vs Layer 2 refers to two types of blockchain scaling solutions. Layer 1 is the base protocol, such as Ethereum or Bitcoin, handling all transactions directly on-chain. Layer 2 operates on top of Layer 1 to improve speed and reduce fees by processing transactions off-chain and settling them later. While Layer 1 offers higher security and decentralization, Layer 2 enhances scalability and performance. Understanding Layer 1 vs Layer 2 is crucial for developers and businesses aiming to build efficient and scalable blockchain applications.