Nanobodies are a class of antigen-binding protein derived from camelids that achieve comparable binding affinities and specificities to classical antibodies, despite comprising only a single 15 kDa variable domain. Their reduced size makes them an exciting target molecule with which we can explore the molecular code that underpins binding specificity-how is such high specificity achieved? Here, we use a novel dataset of 90 nonredundant, protein-binding nanobodies with antigen-bound crystal structures to address this question. To provide a baseline for comparison we construct an analogous set of classical antibodies, allowing us to probe how nanobodies achieve high specificity binding with a dramatically reduced sequence space. Our analysis reveals that nanobodies do not diversify their framework region to compensate for the loss of the VL domain. In addition to the previously reported increase in H3 loop length, we find that nanobodies create diversity by drawing their paratope regions from a significantly larger set of aligned sequence positions, and by exhibiting greater structural variation in their H1 and H2 loops.