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Layers of Blockchain Architecture: Layer 0, 1, 2, 3 Explained

what is blockchain layer architecture

Blockchain technology offers benefits like transparency and unbreachable security by enhancing efficiency, minimizing operational costs, and eliminating intermediaries.

However, because blockchains do not have a single controlling body, all transactions must be safe, and data must be securely maintained on a distributed ledger. The distributed ledger technology (DLT) follows a predetermined protocol, with multiple computers (or nodes) throughout the network coming to a “consensus” to confirm transactional data.

As new entries arrive, each node adds, examines, and changes them. To allow this unique kind of transaction authentication, blockchains feature a layered design.

TLDR; Here’s a video that will help you understand what are blockchain layers and help in differentiating each of them,

Layers of Blockchain Architecture

Blockchain technology layers can be categorized as,

Layer 0 Blockchain

Comprising hardware, protocols, connections, and other components that form the foundation of a blockchain ecosystem. Layer 0 acts as a network architecture underlying the blockchain. This layer can be thought of as a “network of the blockchains”

Interchain operability is also enabled by Layer 0, which allows blockchains to communicate with one another. It provides a critical backbone for addressing future layer scalability difficulties. Layer 0 often employs a native token to enable participation and development.

Polkadot, Avalanche, Cardano, and Cosmos are some examples of Layer 0 blockchains.

Layer 1 Blockchain

Layer 1 is responsible for carrying out the bulk of tasks that maintain a blockchain network’s fundamental operations like dispute resolution, consensus mechanism, programming languages, protocols, and restrictions. Layer 1 symbolizes the actual blockchain.

The large number of jobs that this tier must manage frequently causes scalability problems. As more individuals enter a blockchain, the amount of computational power required to solve and add blocks to the chain grows, resulting in higher fees and longer processing times.

The scalability concern is somewhat mitigated by improved consensus techniques such as proof of stake and the advent of sharding (the division of computing operations into smaller parts). However, history has shown that they are insufficient.

Ethereum, Binance Smart Chain, Bitcoin, and Solana are all examples of Layer 1.

Layer 2 Blockchain

To enhance the blockchain’s productivity, extra processing power is required. However, this necessitates the inclusion of extra nodes, which clogs the network. Although adding nodes is essential for sustaining a blockchain’s decentralized character, fiddling with scalability, decentralization, or throughput will affect the others on layer 1.

As a result, layer 1 cannot be enlarged without relocating all processing to a second layer created on top of the first that is layer 2. This is made feasible by allowing third-party solutions to be integrated with layer 1.

A new network, Layer 2, revamps Layer 1 and manages all the transactional validations. Layer 2 sits on top of Layer 1 in the blockchain ecosystem and constantly exchanges information with it. However, Layer 1 is only responsible for managing the addition and creation of new blocks to the blockchain.

For example, consider the Lightning Network as an example of a layer 2 blockchain deployed on the Bitcoin blockchain.

Layer 3 Blockchain

The last layer of the blockchain ecosystem and the one visible to the human eye. Layer 3 is the one where participants will eventually interact with the user interface. When working with Layer 1 and Layer 2, this layer aims to provide simplicity and ease to the overall functionality.

Layer 3 not only provides UI, but also utility in the form of intra- and inter-chain operability, such as decentralized exchanges, liquidity provisioning, and staking applications. Decentralized apps (dApps) are a type of layer 3 interface that provides real-world applications for blockchain technology.

Some other examples include decentralized crypto exchanges like Pancake Swap and Uniswap.


Lastly, we can conclude that the creation of real-world blockchain use cases relies heavily on layer three apps. But, seeing the current pace, blockchains are currently extremely sophisticated and still in their budding state. Therefore, it will take years to complete blockchain development.

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