Blockchain Layers Explained
Have you heard the terms L0, L1 and L2? Do you know what these abbreviations mean? The abbreviations stand for Layer 0, Layer 1 and Layer 2, but what does the word “layer” refer to when describing the blockchain?
L0 is the hardware or infrastructure layer of the blockchain. This includes the network and consensus mechanism of the blockchain, as well as the internet connection of the blockchain.
Layer 1 can be thought of as the main blockchain. When most people refer to the blockchain they are referring to L1. L1 is where blocks are created and validated. With the Ethereum blockchain, Layer 1 is the Ethereum mainnet. With the Flow blockchain, Layer 1 is the Flow mainnet.
There are two alternatives to scale a blockchain to handle more transactions.
The first is to scale the mainnet, L1. Often this requires completely altering the fundamental technology of the Layer 1 blockchain.
The second way to scale a blockchain is to implement a Layer 2. Layer 2 is a blockchain that sits on top of a Layer 1 mainnet. Work from Layer 1 is offloaded onto Layer 2 to handle transactions, bundle them together and then send what can be thought of as a summary of transactions back to the mainnet, L1.
L2 does not require any changes to L1. L2 leverages the security of L1 by anchoring its state to L1.
Before The Merge, the Ethereum mainnet (L1) could handle roughly 15 transactions a second. With Layer 2 technology, Ethereum can handle between 2,000 and 4,000 transactions a second.
In September 2022, Ethereum switched its consensus protocol from PoW to PoS. What does the switch from PoW to PoS mean for Ethereum L2? Sitting on top of a PoS consensus will allow Etherum L2 to handle even more transactions. Ethereum coupled with PoS and L2s will be able to handle hundreds of thousands to potentially millions of transactions a second.
BitCoin, Ethereum and ZCash all use L2 technology.
L3 are decentralized applications (dapps) or user Interface UI that allows us to interface and leverage blockchain technology. Examples of dapps are crypto exchanges, staking applications and NFT marketplaces.
