Blockchain Layers Explained: What They Are and How They Work
THE WEB3 JOURNAL: Your Diary into Blockchain
The web3 space is similar to a multi-story castle with different floors (in this case called Layers) that enable easier and faster operations. Hence, to understand the space, it is necessary to acknowledge the benefits of the several layers and why they exist.
Blockchain layers are used to improve the scalability, security, and efficiency of blockchain networks. By separating different functions into different layers, blockchain networks can be more efficient and secure.
There are three main types of blockchain layers:
- Layer 0: Layer 0 is the foundational layer of the blockchain ecosystem. It provides the infrastructure and services that layer 1 and layer 2 blockchains need to operate.
- Layer 1: Layer 1 is the base layer of a blockchain network. It is responsible for processing and validating transactions. Examples of layer 1 blockchains include Bitcoin, Ethereum, and Solana.
- Layer 2: Layer 2 is a layer built on top of a layer 1 blockchain. It is used to improve the scalability, speed, and efficiency of transactions. Examples of layer 2 solutions include state channels, sidechains, and rollups.
As earlier said, a blockchain layer can be synonymous with the floors of a building but in this case, the building is the blockchain network, and each floor (layer) has a different purpose and function. This building in question has immense potential, but one of its biggest challenges is scalability. As blockchain networks can only handle a limited number of transactions per second, this can lead to congestion and high fees. Hence, the need to resolve the scalability issue.
There are two major routes through which a blockchain network can be scaled: On-Chain scaling and Off-Chain scaling. The only issue is that the blockchain trilemma (scalability, security, and decentralization) must be resolved through any method of choice.
ON-CHAIN SCALING
On-chain scaling refers to changes to the blockchain protocol itself (layer 1 Mainnet) to improve scalability. This means changing the way that Ethereum processes and validates transactions.
One example of on-chain scaling is sharding. Sharding divides the Ethereum blockchain into smaller pieces (shards). Each shard is processed by a subset of validators. This allows multiple transactions to be processed in parallel, which can improve scalability.
However, scaling by layer-2 rollups (off-chain scaling) has taken over as the primary scaling technique due to the fact that although enacting changes on the main chain itself would increase scale, it further leads to a decrease in security and decentralization.
OFF-CHAIN SCALING
Off-chain solutions are implemented separately from Mainnet; in short, they require no changes to the existing main layer 1 protocol. which led to off-shoots of the mainnet known as Layer2. Some layer 2 solutions, such as optimistic rollups, zero-knowledge rollups, and state channels, rely on the security of the Ethereum mainnet to protect transactions.
Other layer 2 solutions, such as sidechains, validiums, and plasma chains, create new blockchains that have their security mechanisms.
Rollups, sidechains, state channels, plasma, and validiums are all different types of layer 2 scaling solutions. Each type of solution has its advantages and disadvantages. The best type of solution for you will depend on your specific needs and requirements.
- State channels: State channels allow two or more parties to transact with each other off-chain before submitting the final results to the layer 1 blockchain.
- Sidechains: Sidechains are separate blockchains that are linked to the layer 1 blockchain. This allows users to move assets between the two blockchains quickly and easily.
- Rollups: Rollups bundle multiple transactions together and process them off-chain before submitting them to the layer 1 blockchain.
- Validiums: Validiums are a type of rollup that uses zero-knowledge proofs to improve privacy and security.
Here are analogies to help understand scaling methods
Imagine a busy highway. The highway is the layer 1 blockchain. Cars are transactions.
State channels are like two lanes of traffic that are closed off from the main highway. Cars can drive in the two lanes without having to worry about the traffic on the main highway.
Sidechains are like separate highways that are connected to the main highway. Cars can move between the two highways quickly and easily.
Rollups are like buses that pick up cars and drive them off the highway. The buses then bundle the cars together and drive them back onto the highway.
Validiums are like buses that pick up cars and drive them into a secret garage. The buses then validate the cars and drive them back onto the highway.
In conclusion, blockchain layers are a complex topic, but I hope this article has helped you understand the basics. Layer 2 solutions are a promising way to improve the scalability of layer 1 blockchains. There are a number of different scaling methods available, each with its own advantages and disadvantages.
You could also go through more articles on the basics of blockchain and explore how everyday brands are using blockchain to rake in millions. Click here.
