OneArt

<h2 id="header-0">Layer 0-3: All Blockchain Layers Explained</h2>Today, blockchain technology has a wide range of use cases, the most popular of which is crypto and related financial transactions. And for good reason. The technology offers transparency, and security and at the same time reduces the need for intermediaries. Moreover, it reduces costs and increases the financial operations&#39; effectiveness.But no technology is perfect, and blockchain is no exception. It is in solving its issues that Layers come to the rescue. What are the problems and what do these Layers represent?Quick Take:<ul><li>Blockchain Layers solve its trilemma to some extent.</li><li>The kind of blockchain we used to think of refers to layer 1 (BNB Smart Chain, Ethereum, Bitcoin).</li><li>While layer 0 is the “infrastructure base”, layer 3 allows you to address certain functional shortcomings of a blockchain-powered project.</li><li>Layer 3 is the application level: the user interacts with it the most.</li></ul><h3 id="but-first-the-blockchain-trilemma-a-behind-the-scenes-view">But first, the blockchain trilemma: a “behind-the-scenes” view</h3>The so-called blockchain trilemma is built on the notion that of the three main blockchain characteristics — decentralization, security, and scalability — it can only have two of the three at once.&#x1f4da;Curious fact: Scientist Eric Brewer developed the CAP theorem in the 1980s. According to it, a decentralized database can have only two of the three basic properties​​ — consistency, availability, and partition tolerance. Given that blockchain is a database with no single center of aggregation and control, this theorem is now widely used as a blockchain trilemma.<img src="https://academy-public.coinmarketcap.com/optimized-uploads/fadf49a2b7214ed882c479f1f55d922e.png" />Thus, the main characteristics of the blockchain that make up its trilemma are:<ul><li>Scalability</li></ul>This more often refers to the throughput capacity of the blockchain. In other words, it&#39;s the ability to process a certain volume of transactions in a certain amount of time (aka several transactions per second).With the proliferation of crypto in everyday life, the demand for transaction handling has also increased, which ultimately affects blockchain throughput.To take an example from life, Ethtereum faced this problem. Increased user demand caused increased gas fees, making transaction processing time- and money-inefficient for both the user and the blockchain.&#x1f4da; Curious fact: Ethereum is a perfect example of a trilemma. It focused on decentralization and security, but sacrificed scalability (limited number of transactions per second).<ul><li>Security</li></ul>This applies to the blockchain&#39;s ability to be resistant to hacker attacks.<ul><li>Decentralization</li></ul>Blockchain is not regulated by any central body, i.e. it is decentralized.<blockquote>The traditional version of blockchain usually refers to public blockchains. However, there are also private blockchains that set their own rules of operation.</blockquote>&#x1f449; Read more <a href="https://oneart.digital/en/blog/what-is-a-blockchain-how-does-it-work" rel="noopener noreferrer nofollow">about blockchain</a><img src="https://academy-public.coinmarketcap.com/optimized-uploads/585bc01e62d84fc4988ecdb2e1c1ac2d.png" />It turns out that a particular blockchain cannot include all three characteristics. On the one hand, blockchain has a fairly high level of security. On the other hand, it needs to remain decentralized by its nature and still be very scalable to keep up with the growing number of users, the volume of transactions and other data. Layer 2 and Layer 3 blockchains were designed precisely in response to the need for scalability while maintaining the highest level of security. They intend to solve the blockchain trilemma.Now let&#39;s go into more detail about all of the blockchain layers and the function of each, including Layer 0 and Layer 1 (which you are probably already familiar with).<h3 id="what-are-they-blockchain-layers">What are they, blockchain layers?</h3>In brief, there are 4 blockchain layers:<ul><li>Layer 0 is the underlying infrastructure on which multiple Layer 1 blockchains can be built. It mainly provides the interconnectivity between multiple blockchains (i.e., their interaction). Example: <a href="https://oneart.digital/en/blog/avalanche-explained-how-does-it-work-is-it-a-breakthrough" rel="noopener noreferrer nofollow">Avalanche</a>.</li><li>Layer 1 is the underlying blockchain network. They are mainly created for validation (checking and completing a transaction and adding it to the blockchain). Example: <a href="https://oneart.digital/en/blog/what-is-ethereum-how-does-it-operate" rel="noopener noreferrer nofollow">Ethereum</a>.</li><li>Layer 2 is designed to solve the problem of scaling Layer 1 blockchains by processing operations (more often transactions) outside of Layer 1 blockchains to reduce their operational burden. Example: <a href="https://oneart.digital/en/blog/what-is-polygon-how-does-it-operate" rel="noopener noreferrer nofollow">Polygon</a>.</li><li>Layer 3 is known as the application layer or blockchain-powered apps, including games, wallets, and other dApps. Example: Uniswap, Decentraland are some of the layer 3 blockchain projects.</li></ul><img src="https://academy-public.coinmarketcap.com/optimized-uploads/2a7d03b8c43540c8a85ae27cd9fa84d0.png" />Now let&#39;s explore each of them in more detail!<h3 id="layer-0-blockchain-underlay">Layer 0: blockchain ​​underlay</h3>Although the concept of level 0 is quite abstract and there is no unanimity on its definition, it can be described roughly as follows: it is where the foundation for the further functioning of blockchain technology lies. This layer consists of the Internet, hardware, and connections, thus forming the basic infrastructure on which multiple layer 1 blockchains can be built.Thus, layer 0 blockchains perform the following functions:<ol><li>Help blockchains “communicate” with each other</li></ol>How? For example, by creating an ecosystem of blockchains using specialized communication protocols between blockchains (e.g. Tendermint IBC within the Cosmos project).What does blockchain interoperability bring?Firstly, there is no need to use <a href="https://oneart.digital/en/blog/blockchain-bridge-explained-what-is-it-and-how-does-it-work" rel="noopener noreferrer nofollow">blockchain bridges</a>. Blockchain networks built on the same Layer 0 protocol can communicate with each other by default without the need to develop and use bridges, which is expensive and inefficient in terms of time.Secondly, using a base such as Layer 0 allows the products created within it to interact more closely with each other, increasing the efficiency of each of them.As a result, it is possible to improve the efficiency of the blockchain(s) and ultimately provide a more user-friendly experience for end users.<ol><li>Allow transactions to be faster and cheaper</li></ol>For example, with the same Tendermint IBC, PoS consensus can be achieved in several chains at once. This greatly speeds up transaction completion.As a result, transactions on cross-chain exchanges are faster and cheaper.<ol><li>It’s infrastructure for developers</li></ol>Level 0 is a base with often ready-to-use features that only need to be implemented. In other words, developers do not need to create blockchains from scratch, because they already have a certain set of tools (aka toolkits).<h3 id="layer-1-ethereum-and-bitcoin-and-not-only-represented">Layer 1 — Ethereum and Bitcoin (and not only) represented</h3>This is the level of blockchain that most people know. For example, BNB Smart Chain, Ethereum, Bitcoin, and Solana are examples of Layer 1 blockchains.Layer 1 is based on immutability, which, of course, increases the security of the blockchain. It is responsible for:<ul><li>Dispute resolution</li><li>Consensus processes (PoW, PoS)</li><li>Transaction processing and termination</li><li>Rules that support the basic functionality of the blockchain network</li><li>Support of the main coin for the network (e.g. ETH for Ethereum, BTC for Bitcoin), etc.</li></ul>The main problem with layer 1 blockchains is scalability. During times of increased demand, the load on the network increases, which does not have the best effect on the speed and price (commission) of transaction processing. This outcome is not the most pleasant both for end-users and for the network itself. There are several solutions for such a problem.<ol><li>Increase the size of the block itself</li><li>Change the consensus type</li></ol>For example, from PoW to PoS. By the way, the Merge (or Ethereum 2.0), one of the biggest updates to the Ethereum network, is precisely the switch from PoW to PoS. In turn, Bitcoin uses the Proof of Work consensus mechanism, which requires much more computing power.<ol><li>Implement sharding</li></ol>Sharding or segmentation allows the task of validating a transaction to be divided into smaller and easier-to-manage chunks. As a result, this &#34;fragmentation&#34; reduces the load on the network and, in addition, allows you to use the computing power of more nodes. This results in faster transactions.❗️However! Not all updates can be solved at layer 1. The Merge is rather an exception since such an update is very costly in terms of time and money. This is how tech crypto enthusiasts came up with a solution that goes beyond Layer 1 — Layer 2 blockchains.<h3 id="layer-2-34-off-chain-34-solutions">Layer 2: &#34;off-chain&#34; solutions</h3>Layer 2 more often refers to integration or technically a secondary protocol/infrastructure built on top of an existing blockchain system. Their main purpose is to help the layer 1 blockchain solve problems with transaction speed and scaling.☝️Important: Layer 2 blockchains are not an additional feature that is embedded into the core network. It is a separate system in which transactions and blockchain processes occur almost independently of layer 1, while “communication” with the core occurs already at the level of transaction completion and data transfer to the main network.Such solutions are often referred to as off-chain or sidechain. They are semi-independent blockchains that work in tandem with the corresponding main chain.&#x1f370; You can think of them as an additional technical layer placed on top of the main one (layer 1), but without breaking its structure (like a layer cake).Thus, Layer 2 blockchains help unload the core network by processing payments on a separate blockchain. This thereby helps speed up transaction handling, which ultimately has a positive impact on the throughput of the main network without compromising its security. In other words, while the main chain provides security, the second layer offers high throughput.To sum up: Layer 2 blockchains are the saviors of layer 1 blockchains. While the latter is overloaded, the former take it upon themselves to compensate for the slack to reduce transaction times and lower transaction fees. For example, Polygon is the sidechain or Layer 2 blockchain for the Layer 1 blockchain, Ethereum.So, the problems with scalability are more or less solved. Security and decentralization are preserved. The trilemma is more or less solved. Why, then, are Level 3 blockchains needed?<h3 id="layer-3-tailored-solutions-to-address-specific-shortcomings">Layer 3: tailored solutions to address specific shortcomings</h3>☝️This level is rather immature and poorly explored, which makes the concept of level 3 rather vague. Nevertheless, some insight into it is already evident.Let&#39;s note right away that Layer 3 blockchains are not overlaid on Layer 2 solutions to provide ANY MORE ability to grow and accelerate. It&#39;s not really about that.What is layer 3 blockchain?Layer 3 is called the application layer, the layer we, as users, interact with the most. To some extent, it can be called a gateway to the world of blockchain, making it applicable in our everyday life. This layer is where dApps are most often placed, as well as the crypto protocols that allow blockchain-based applications to function.Also, layer 3 solutions are often used to address a particular need of a project, such as increased privacy. For example, while Layer 2 is used to increase scalability, &#34;overlaying&#34; Layer 3 as a separate technical stack will help solve the problem of confidentiality (it may be especially relevant for projects involving confidential financial transactions).<img src="https://academy-public.coinmarketcap.com/optimized-uploads/dc663243bd2840a3bd87f76c618a8d75.png" />You can think of layer 3 blockchain as additional applications that extend the basic functionality of Layer 1. They extend the functionality of the network to something more than just making and processing transactions.Therefore, Layer 3 can be in the form of:<ul><li>Decentralized crypto exchanges (Pancake Swap, Uniswap).</li><li>Blockchain-powered games (CryptoKitties).</li><li>Multifunctional metaverse (Decentraland).</li><li>Wallets, like the OneArt crypto &amp; NFT wallet.</li></ul><a href="https://oneart.digital/en/blog/what-is-a-crypto-wallet" rel="noopener noreferrer nofollow">Crypto wallet</a> is the gateway to the world of blockchain for ordinary users. It is a simple interface, in this case allowing users to manage their crypto assets and NFTs through a single application. If you want to know more about the OneArt wallet and how to secure your crypto, welcome to our YouTube channel (there you will find short video tutorials about how the wallet works and how to start working with it).<blockquote><a href="https://www.youtube.com/watch?v&#61;9vPfeczePww" rel="noopener noreferrer nofollow">https://www.youtube.com/watch?v&#61;9vPfeczePww</a></blockquote><h2 id="header-1">Final thoughts</h2>Perhaps the evolution of blockchain technology into today&#39;s multi-tiered system began because of serious scaling problems. Due to increased demand, systems simply could not provide a seamless user experience. This was an inhibiting factor for even more people to adapt to the new technology. For the technology to find widespread use in everyday life, it was necessary to make it scalable, but still, maintain its decentralized nature and security.<h3 id="layer-1-vs-layer-2-vs-layer-3-blockchain-architecture">Layer 1 vs. Layer 2 vs. Layer 3 blockchain architecture</h3>So what we have today:<ul><li>Level 0 provides an efficient tech base for the interaction of multiple blockchains.</li><li>There is a technical foundation in the form of Layer 1, which serves as the basis for decentralized systems and allows them to communicate.</li><li>The scalability problems of the underlying blockchain are solved by Layer 2 protocols.</li><li>Layer 3 protocols were introduced to eliminate the specific problems of a particular project, without breaking the first two layers.</li><li>Also, layer 3 became the closest to the modern user, allowing him to create NFTs, explore meta universes, manage his NFTs and crypto portfolio, and much more, thanks to dApps.</li></ul>We&#39;re getting even closer to real-world blockchain use cases, which can increase its adaptability among ordinary users. Follow official OneArt channels to find the latest info and updates:<ul><li><a href="https://twitter.com/art_wallet" rel="noopener noreferrer nofollow">Twitter</a></li><li><a href="https://t.me/art_wallet" rel="noopener noreferrer nofollow">Telegram Group</a></li><li><a href="https://t.me/artwallet_official" rel="noopener noreferrer nofollow">Telegram Announcements</a></li><li><a href="https://www.linkedin.com/company/oneart/" rel="noopener noreferrer nofollow">LinkedIn</a></li><li><a href="https://www.youtube.com/&#64;oneart5089" rel="noopener noreferrer nofollow">YouTube</a></li></ul>

Blockchain Layers Explained

Table of Contents

OneArt

Other articles published on Feb 22, 2023

The Creators of Liquidity Locking, UniCrypt, Rebrand to UNCX Network

Here's How Access Protocol Is Reinventing Digital Content Monetization

Regulatory Pressure: Binance Consider Ending Relationships With US Businesses

Chobwarts event. Let the magic happen

Layer 2 Network Arbitrum Surpasses Ethereum in Daily Transactions

Instagram Verif

Join our free newsletter for daily crypto updates!