Some benefits of blockchain technology include minimizing operational costs, eliminating intermediaries, and enhancing efficiency with a transparent, secure system. Blockchain technology is used by millions of people around the world, and there is the potential to make a lot of money with this technology. Here, you will be able to learn how exactly this technology works and what it means when someone mentions layers of blockchain.
What Are Blockchain Layers?
There is not a single controlling body for blockchain technology which means that a layered design is most efficient. A layered design is helpful because it allows us to better organize functions in distinct modules, and it allows for more scalable and flexible designs that can be used by more people at a time. Transactions must be secure and safe to maintain, and distributed ledger technology (DLT) is used to achieve this. This form of transaction, in which the sender’s identity is completely protected and secure, leads to a layered blockchain architecture.
DLT includes multiple computers in a network that follows a predetermined protocol to come to a consensus and confirm transactional data. As new data entries arrive on the network, each computer will examine it, make changes as necessary, and ultimately add it to the network.
The blockchain layers include an infrastructure layer, a data layer, a network layer, a consensus layer, and an application and presentation layer. They can also be categorized as layers 0, 1, 2, and 3.
Understanding the Blockchain Architecture
The blockchain involves different layers, and the layers of blockchain help create a functional system that forms the basis of many transactions and processes. These layers work together and form a powerful network that has a great many uses and features.
1. Infrastructure or hardware layer
Blockchain platforms use a peer-to-peer network in which nodes connect to each other to quickly and easily share data. A client-server architecture allows the data exchange between nodes to be possible, as some nodes are owned by clients, and others belong to the server.
Essentially, the infrastructure layer is a network of devices that all exchange information with each other. Each individual device, called a node, will independently monitor and verify transactions at random. Each device is at the same level, which maximizes efficiency.
2. The data layer
The blockchain involves the exchange of a large amount of information, and this is done using the data layer. The blockchain is constantly expanding as additional data is added to the network, and it is a very large system.
Transactions on the blockchain involve the sender’s wallet private key, which means that the data can only be viewed and modified by the sender. This protects the identity of the sender and also keeps the transaction process secure. The receiver is also protected with a private key, and data is encrypted so that it cannot be tampered with.
3. The network layer
The network layer is how nodes communicate data related to transactions. Transactions must be confirmed as legitimate before they arrive at the receiver, and it is important for this communication to be quick and efficient. This layer allows nodes, or computers, to communicate with each other, and it interconnects the entire network.
The network layer manages block addition, block generation, and node detection. These functions are very important and contribute to the discovery of different nodes and the communication between them for transactions.
4. The consensus layer
The consensus layer is very important for the functioning of a blockchain. It is responsible for transaction authentication, and without it, there would be a system failure.
This layer implements the protocol. The protocol requires that each transaction is verified by a certain number of nodes, and each of these nodes must agree on the legitimacy of the transaction. Each of the nodes has an equal role in this protocol which means that the blockchain will remain decentralized.
Multiple blocks can form at the same time, and this means that there might be a large number of nodes that are working at a single time. These nodes will be bundling transactions, processing them, and ultimately will add them to the blockchain itself. The role of the consensus layer is to validate blocks, order them, and make sure that all nodes agree.
5. Application and presentation layer
The application layer has programs that are used by end-users to establish blockchain network communication. This can include decentralized applications, application programming interfaces, user interfaces, smart contracts, scripts, chain codes, and frameworks. The presentation layer is the visible part of the blockchain that can be seen by users, and it is how people interact with the blockchain network.
Numerical Layers of Blockchain
The layers of blockchain discussed above can often be put into terms of 0, 1, 2, and 3. You might already be familiar with some of these layers, even if you do not know them, and here is a deeper look into each of the layers and what their functions are.
1. Layer 0
Layer 0 is the architecture that underlies the entire blockchain, and it can be thought of as the network comprising nodes of the blockchain. It includes hardware, protocols, connections, and components that are used to create the foundation of the blockchain. Layer 0 gives the different blockchains the ability to communicate with each other.
Some examples of layer 0 include Avalanche, Cardano, Polkadot, and Cosmos.
2. Layer 1
Layer 1 performs most of the tasks that maintain the fundamental operations of the blockchain network. This includes programming languages, consensus mechanisms, dispute resolution, protocols, and restrictions. The blockchain itself is symbolized as layer 1.
Layer 1 is responsible for managing a large number of jobs which can cause problems with scaling. As the number of people that enter the blockchain increases, a greater amount of computational power is required, which can increase the costs and processing times.
This scalability issue can be helped by proof-of-stake and sharding, which is dividing computer operations into smaller parts, but they are not solutions that fully get rid of the problem.
Layer 1 includes Bitcoin, Solana, Binance Smart Chain, and Ethereum.
3. Layer 2
Layer 2 has the purpose of revamping layer 1. It sits on top of layer 1 in the blockchain architecture, and layer 2 works with layer 1 closely to help with the scalability issue. Layer 2 validates transactions and exchanges information with layer 1.
New blocks are added and created on layer 1 of the blockchain, and layer 2 then makes sure that these additional nodes can process information properly and that the entire network is properly scaled. Transactions are off-loaded which means that they are no longer putting a burden on the network itself, and that means that less energy and storage space is needed for each transaction. Off-loading transactions results in a highly scalable network that can accommodate a large number of users at one time.
An example of layer 2 is the Lightning Network which works on the Bitcoin blockchain, and its purpose is to help manage the transactional validations for Bitcoin. It helps with the scalability issue with Bitcoin by off-loading transactions into the Lightning Network, so they no longer take up space and energy on Bitcoin’s network.
4. Layer 3
Layer three is the part of the blockchain network that can be seen by the human eye, and it is where people can interact with user interfaces.
Apart from that, layer three is also one of the layers of blockchain that participates in decentralized exchanges, staking applications, and liquidity provisioning.
An example of the layer 3 blockchain is decentralized apps. Decentralized apps allow blockchain technology to be used in the real world, and they can include wallet providers for cryptocurrency, decentralized crypto exchanges, liquidity management protocols, and payment mechanisms.
Layer 3 is the blockchain layer that you are most likely to be familiar with, as this is the element that you directly interact with when using blockchain technology.
Conclusion
Blockchain technology is widely accessible because of its scalability which allows for a large number of users to participate in the network. The reason why blockchain can be scaled to such a large size is that it uses a layered system.
More users mean a larger network is necessary, and it is important to maintain efficiency while also allowing a large number of people to access the blockchain network. Cryptocurrency is a popular form of investment, and it has been taking over the economy by storm, and with that comes the blockchain, which is comprised of layers.
Layer three apps tend to be the ones that are used in the real world, and those are the ones that you might be most familiar with. These layer three apps are supported by layers 0, 1, and 2 of the blockchain, and these all work together to form the blockchain architecture that supports many technologies and functions that are used by millions of people around the world.
FAQs
1. What is the best layer of blockchain?
There is no single best layer of blockchain, as they are all important for the overall network. Layer 1 is typically viewed as being very important because it involves the fundamental operations of the blockchain.
However, layer 1 cannot exist without layer 0, which is the framework for the entire system. Layer 2 allows for the blockchain network to be accessible by a large number of users, so it is equally important. Finally, layer 3 is used to enable people to interact with the blockchain network.
Therefore, all the layers are extremely important.
2. Does LayerZero have a token?
LayerZero is currently in the process of releasing a token on Ethereum called RADAR. So, while it does not currently have a token, there will be one released soon. LayerZero is an omnichain protocol that works with decentralized applications and unites them across blockchains.
3. Is Polkadot layer 0 or layer 1?
Polkadot is a layer 0 blockchain. It provides a foundation for various crypto projects, so it is not layer 1 because it operates at a deeper level than other level 1 blockchains and is therefore related more to infrastructure. Polkadot is designed to let blockchains exchange messages and transactions with each other without having to rely on a third-party.
