Blockchain, as a underlying technology, has a total of seven layers: transport layer, data layer, network layer, consensus layer, incentive layer, contract layer, and application layer. And these seven layers correspond to layer0, layer1, and layer2 respectively.
Layer0 Transport Layer
Corresponds to the bottom layer of the model, mainly involving the interaction and integration between blockchain and traditional networks.
Layer1 On-chain Scaling
Includes data layer, network layer, consensus layer, and incentive layer, which refers to the scaling solutions implemented on the underlying blockchain protocol.
Layer2 Off-chain Scaling
Contract layer, which refers to improving transaction processing speed without changing the underlying blockchain protocol and basic rules through solutions such as state channels and sidechains.
Layer3 Client Application Layer
Refers to the application layer, the UI platform for users to interact with blockchain technology.
Layer0#
L0 is the ground floor, where the connection between the Internet and hardware exists, including the hardware, protocols, connections, and other components that make up the foundation of the blockchain ecosystem. Layer 0 acts as the network architecture of the underlying blockchain. Layer 0 also enables cross-chain operability, allowing blockchains to communicate with each other. It provides a critical backbone network to address the scalability challenges of future layers. Layer 0 typically uses native tokens for participation and development.
Layer 0 blockchain projects include: Polkadot, Avalanche, Cardano, and Cosmos, etc.
Layer1#
Layer 1 blockchain represents the actual blockchain, which is the blockchain that processes and completes transactions on its own blockchain (such as Bitcoin and Ethereum). It is responsible for executing most of the tasks that maintain the basic operations of the blockchain network, such as consensus mechanisms, programming languages, protocols, and restrictions for things like consensus (PoW, PoS), as well as all the technical details of how things like block time and dispute resolution work. The three most important aspects of the first layer are the blockchain trilemma being overcome: decentralization, security, and scalability. However, so far, no blockchain has been able to solve all three problems well at the same time.
Layer 1 blockchain projects include: Ethereum, Binance Smart Chain, Bitcoin, Solana, etc.
Layer2#
Layer 2 is a third-party integration used in conjunction with Layer 1. The main purpose of Layer 2 is to improve the productivity, scalability, and transactions per second (system throughput) of the blockchain. Layer 2 scaling solutions are the most effective way to address the scalability issues of PoW networks.
①Nested blockchains, where a nested second-layer blockchain runs on top of another. There can be multiple blockchain layers on a single main chain. ②State channels. Facilitate bidirectional communication between the blockchain and off-chain transaction channels through various methods, thereby increasing the overall transaction capacity and speed. It is a network of adjacent resources protected by mechanisms such as multi-signature or smart contracts.
③Sidechains. Sidechains are transaction chains that run alongside the blockchain and are used for bulk transactions. Sidechains have their own consensus methods and can be adjusted for speed and scalability, and utility tokens are often used as part of the data transfer mechanism between sidechains and main chains.
④Rollups are second-layer blockchain scaling solutions that execute transactions outside the first-layer network and then upload the data from the transactions to the second-layer blockchain. The first layer can guarantee the security of the aggregation because the data is on the underlying layer.
Layer3#
Layer 3 is the layer where participants ultimately interact with the user interface. When using Layer 1 and Layer 2, this layer aims to provide simplicity and usability for overall functionality. Layer 3 not only provides UI, but also provides utility in the form of on-chain and cross-chain operability. Decentralized applications (dApps) are a type of Layer 3 interface that provides real-world applications for blockchain technology. Other examples include decentralized cryptocurrency exchanges such as Pancakeswap and Uniswap.
Summary
If we use an analogy to describe L0-L3:
L0 is a city, and the more prosperous the city construction, the more congested the roads, and the easier it is to get stuck in traffic;
L1 is an elevated highway, allowing everyone to travel at high speed and greatly reducing the pressure on the ground roads;
L2 is an intercity high-speed rail, facilitating fast and convenient connections between different cities;
L3 is built on top of the elevated highway, establishing point-to-point high-speed channels specifically for popular routes.