Four layers of the future internet
From setting up protocols to fully-fledged exchanges. Let us peer through the curtain and look at the inner workings of blockchain tech!
What networks look like:
Think of the structure of the internet. It isn’t just wires, servers, and websites. The internet’s underlying structure comprises protocols, basic tools, and tons of hardware. The blog you see right now is a product of the layers of tools that make the system possible. One layer sets the foundation for the next layer, ad infinitum.
And it is similar to how the next iteration of the internet, web3, will work.
The future internet (I went deep into this topic here) will use the concepts of blockchain technology to decentralize the internet. And since blockchains run on different principles, it is imperative to learn how the layers of the future internet will work.
But what even is blockchain:
But before we talk about the layers of blockchain, let us get a rudimentary understanding of blockchain technology.
Blockchain technology, at its core, is a distributed ledger where the transaction done at point A can be traced and verified at any other point.
The modern computer network, and the foundation of the current internet, is like a corporate office. You have a central authority that controls structure, redirects orders, and all the transactions pass through that layer. This entity can be thought of as the server that runs the whole system. If a server system like AWS were to disappear tomorrow, you bet half the world would be in peril by evening.
And so, to counter this centralization of assets, blockchain technology is used. The main guiding force of blockchain tech is decentralization. This principle is in stark contrast to the central nature of the contemporary network model.
In a blockchain network, every node can access data and act as a server simultaneously. There is no hierarchy in terms of the computers used to formulate the system. So, if a chunk of a blockchain shuts down for some reason, the entire system would still run.
Layers of blockchain:
The blockchain ecosystem is comprised of four layers in the current models. However, a particular blockchain (and its ecosystem) might not have all the layers. This model is just a general interpretation of what a fully-fledged blockchain can look like:
Layer 0: The framework layer of the blockchain. This layer sets the rules and guidelines for the technology that will govern the blockchains.
Think of it like this: Layer 0 of a blockchain is the foundation stone of the entire ecosystem. Its functionality will be limited, but the structure that it provides to the whole ecosystem is valuable. A layer 0 entity provides a ‘template’ for creating a blockchain. Developers can then use the tools and guidelines of the layer 0 system and build a full-fledged blockchain.
One example of layer 0 is the Cosmos ecosystem. Cosmos is like a ‘blockchain-builder.’ While a developer can deploy apps directly on the Cosmos network, it is much better to build on one of the specialised blockchains built on the system of Cosmos.
Cosmos has a ton of blockchains built on its network. It supports and provides the tech needed to run the blockchains, while the hosted chains give a portion of their profits to Cosmos. Pretty neat, I’d say!
These hosted blockchains are called layer 1 blockchains.
Layer 1: The base layer of the blockchain. Now, right off the bat, not every layer 1 (L1) blockchain needs a layer 0 platform. Some blockchains (like Ethereum and Bitcoin) are built from scratch, while others use tools and environments provided by layer 0.
An L1 blockchain is a lot more refined than the last entry. As a result, developers build their Dapps (Decentralized Apps) on this blockchain layer.
Side note: Dapps are like applications on your phone or PC which perform a specific function. Except they are cooler because they are built on a blockchain.
A blockchain like Bitcoin might provide a good platform for a dApp, but not every dApp is made equal. The bitcoin network processes 5–10 transactions per second.
Suppose you wanted to build an application on bitcoin that required 100 TPS. You have two options in such a case:
Use a different blockchain with a higher TPS or a layer 2 (L2) solution.
Layer 2: The upgrade layer of the blockchain. In our previous example, if the developer is adamant is building on bitcoin, their best (and frankly, only) bet is to use an L2 solution. The main problem they are facing is scalability.
Fortunately, the developer can just route all the transactions through the Lightning Network on the bitcoin blockchain. Lightning Network is like an add-on to the already existing bitcoin.
What does this add-on achieve? Well, it’s not any substantial upgrade, really. It just increases the network’s transaction capacity from an average of 7 TPS to a few million TPS!!! Nothing major, I told you!
A layer 2 solution adds additional utilities to the base layer of the blockchain and makes it a lot more practical. While the blockchain trilemma (more on that some other time) has been a bottleneck that hasn’t been solved, using layer 2 solutions can be a good alternative solution.
All these additional functionalities allow the dApps to surpass the blockchain’s inherent limits and build better.
Layer 3: The application layer of the blockchain. I’m sure you are sick of the word dApp by now. Well, this is the place where all this sickening magic happens.
While layers 0, 1 and 2 set the ecosystem for the deployment of applications, the real applications are deployed here on layer 3.
Layer 3 is the surface of the blockchain. A place where we, non-developers, gather. This layer has all your popular dApps, DAOs, exchanges, NFT projects and everything in between.
Tl;dr:
Layer 0 solutions set up rules for the blockchain ecosystem. Layer 1 is the actual blockchain. Layer 2 solutions are integrations to the layer 1 blockchain that enhance the usability of the base blockchain. And layer 3 is the surface of the blockchain with which common folks like us interact.
However, not every ecosystem needs all the parts. Most blockchains are standalone products that aren’t built upon a layer 0 environment. And then, layer 1 blockchains can act as layer 0 support structures too!
An example: Ethereum, a layer 1 blockchain by every metric, hosts the Polygon network. At this point, the definition of layers 0, 1 and 2 become muddled.
Similarly, not every dApp needs a layer 2 enhancement. You can build a product directly on layer 1 and call it a day. As long as it works, I suppose!
Think of the whole ecosystem like building a computer. Layer 0 of the blockchain is like a guide to buying the standard parts you need on a functional computer.
Layer 1 culminates all the hard work done in step 0 and delivers a computer. Not a super-computer, but something that can manage your work files easily.
But you haven’t built a computer just to do boring office work, have you? The additional parts that you are invariably going to add to your computer are akin to the layer 2 solutions that tons of blockchains use.
And now that you have the best graphics processor and an over-expensive RAM, you are ready to play games. These games, or applications in general, are the application layer (layer 3) of the blockchain.
I will be writing more such pieces in the near future, going deep into the various building blocks of the blockchain ecosystem. Follow me for the ride!
