Blockchain refers to a decentralized digital ledger that records digital transactions and tracks various assets across a large network of computers.
Blockchain technology has several layers, from L0 (layer 0) to L1 (layer 1), L2 (layer 2), and L3 (layer 3) blockchain. These layers are responsible for making blockchain technology’s operations work, with each layer building on top of the previous one and leveraging the architecture of the previous one to produce a better one.
In this article, we will specifically dive into the layers of blockchain available and understand what they are about.
Understanding Different Blockchain Layers
There are 4 different layers of blockchain which make sure the blockchain technology functions properly. These layers usually build on top of one another’s infrastructure and architecture to make up for faster and better technology. These are:
L0 (Layer 0) Blockchain
The foundational layer facilitates communication and interaction between different blockchains. This is done through a protocol called the Cross-Chain Interoperability Protocol (CCIP), which operates in this layer. This layer acts as the foundational base upon which all the other layers build and provides a solid architecture for other blockchain networks. Examples of blockchains here include Avalanche, Cosmos, and Polkadot. These blockchains also often address issues such as developer flexibility and scalability.
L1 (Layer 1) Blockchain
Blockchains like Bitcoin and Ethereum exist in this layer. The layer 1 blockchain provides the fundamental architecture and infrastructure for the entire blockchain system. Building upon layer 0, they act as the main handlers for security through mechanisms like consensus and proof of work (PoW), process transactions, and support the deployment of smart contracts and applications.
L2 (Layer 2) Blockchain
Layer 2 adds on top of the layer 1 blockchain layer to make transactions cheaper, and faster by storing the data off-chain, reducing the number of nodes needed for transaction validation, and more. There’s nothing much to it. That’s what you need to know. Examples of layer-2 blockchains include Optimism, Lightning Network, Arbitrum etc
L3 (Layer 3) Blockchain
Layer 3 adds on top of layer 2 and layer 1 blockchain to give us application-specific functionalities or decentralized applications (DApps). These applications focus on interoperability between different blockchains to allow communication between them in a single application. This improves blockchain scalability and complexity making it more accessible to the layman. Examples include Polkadot, Cosmos (IBC Protocol), Superchain, Polygon etc.
Conclusion
Blockchain is the future of online transactions. With its innovative technology and even integration with AI, it is set to explode in the coming years. Heck, even Mastercard believes banks and financial services will integrate blockchain into their everyday transactions, setting a new global standard for payment processing and digital business. So keep an eye out for this.
Next Articles
The next set of articles will focus on web3 and blockchain-specific technologies where I would dive deep into their specifics, making it understandable and simpler to understand. Thank you for reading and I do hope to see you in the next article!