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+---
+layout: update
+tag: Developer Update
+date: 2023-03-24
+author: stringhandler
+thumbnail: update-background.jpg
+title: Base Layer Tari versus Second Layer Tari 
+class: subpage
+---
+
+# Base Layer Tari versus Second Layer Tari
+
+Fees on the second layer prevent spam, and also provide an incentive for validator nodes to process transactions. When designing
+the fee mechanics, the Tari development community decided to use the base layer Tari as the source of fees for the main currency
+of the second layer. An alternative, which other blockchains sometimes use, is to mint the second layer fee currency as a block reward.
+Generally these lead to a proof of stake consensus mechanism, which in our opinion, is flawed and susceptible to ["Nothing at stake"](https://medium.com/coinmonks/understanding-proof-of-stake-the-nothing-at-stake-theory-1f0d71bc027) and other problems.
+Instead, Tari has a mechanism to import the base layer currency into the second layer. 
+
+## Base Layer to Second Layer
+
+Firstly, the currency cannot exist in both the base layer and the second layer, so it must be burned on the base layer. This is done 
+using a UTXO that is unspendable and marked as a burn. This removes the funds from the base layer. 
+
+After the burnt UTXO has been sufficiently confirmed (to make reorgs very unlikely), an equal amount of second layer Tari can be claimed using 
+a second layer instruction:
+
+```
+{
+	"ClaimBurn": {
+		"claim": {
+			"public_key": "2a50d463cf05b65a93f81dc39fe75697566a9dd4a776e34f120208d827692444",
+			"output_address": /* commitment */,
+			"range_proof": /*... around 700 bytes ...*/,
+			"proof_of_knowledge": {
+				"public_nonce": "e6278f72598967bb8412233ad9633145594639a12ada5e76b0b88a0653e36101",
+				"u": "ecc210a4af31386069757af38c1422225166d6921fde1235f27e826df2d87b04",
+				"v": "f994af433874cc859518253fb0bbd109bf9b0003c7c720470b781514258b3203"
+			}
+	}
+}
+```
+The output address is the same base layer commitment that hides the amount and spending key (blinding factor). A range proof is required to ensure 
+the commitment does not include a negative value, and the public key and proof of knowledge, which is a Schnorr-like signature for the commitment, ensure that
+only the owner of the public key can claim the burn.
+
+In the same second layer transaction, the user will typically store this commitment in a vault in their account. Of course, this transaction incurs fees, so the 
+commitment is immediately split into a revealed amount and a new commitment. The revealed amount is used to pay the fees.
+
+The second layer Tari can now be used as normal fungible, confidential asset on the second layer for use cases other than fees.
+
+## Second Layer to Base Layer
+
+At this stage it's important to note that base layer Tari and second layer Tari are different currencies, with a floating exchange rate. The reasons behind that are 
+explained better in the [Turbine Model RFC](https://github.com/tari-project/rfcs/blob/main/src/RFC-0320_TurbineModel.md#an-aside---the-monetary-policy-trilemma). 
+
+Conversions to base layer Tari can only be done via trades, exchanges (when available) or atomic swaps. This is often referred to as "Liquidity Exits" in other
+second layer blockchains.