Understanding Blockchain Layers | Mint

An investor must be fully informed about his investment plan, just like with traditional investing.

Understanding how each project fits into the larger ecosystem is critical, beyond the overall messages it can deliver.

One of the easiest ways to start categorizing different currencies is to use the layering principle (and in turn different companies).

It is possible that one may have heard of Blockchain layers as 0, 1, 2 or even Layer 3 solutions.

But what do these layers mean?

Let’s use an analogy to try to understand different blockchain layers.

Create 0

The foundation of a blockchain is provided by Layer 0 technology, which consists of hardware and software components, which can be used to build blockchains.

Consider nodes and everything else required to connect them and transfer data, such as mining equipment and protocols.

Important characteristics

Layer 0 enables interoperability (ie different blockchains built on the same Layer 1 foundation can talk to each other)

Dapps can “cross-chain” if two chains are built on the same layer, which is extremely beneficial for developers.

It combines a conventional network with a blockchain.

Cosmos, Avalanche, Polkadot and Avalanche are among the examples.

Create 1 block chain

Layer 1 is like the first floor of a house.

L1s, examples of which are Bitcoin and Ethereum, are the ones you are most likely aware of.

These use the L0 infrastructure to carry out the data transport.

Consensus mechanisms, ledger systems, a code language, and usually a special token are all possible components of the individual structure that each L1 possesses.

The work required to run a blockchain’s core processes, which consume the most energy, is essentially done on L1.

Key components

At Layer 1, the decentralization, open source, and immutability of a blockchain begin to fully manifest.

At layer 1, each blockchain can operate independently of every other chain.

The chain’s operation, data sharing and documentation are outlined by its special structure.

Develop guidelines and procedures for decentralized applications (Dapps).

Some examples are Bitcoin, Ethereum, Solona, ​​Cardano, Tezos and Algorand.

Layer 2 blockchain

The second floor of the house is layer 2, which has certain advantages, but is not essential for a blockchain to work.

They are third-party integrations that improve efficiency (system throughput) or scalability on top of L1 chains.

“Off-chain” transactions are those that take place at layer 2.

Important characteristics

The main goal of Layer 2 solutions, not to be confused with applications, is to reduce L1 congestion by chaining some transactions.

Greater flexibility for L2 nodes (ie they can be any number of servers owned by a company or individual, rather than decentralized.)

Chains on layer 1 must be secured.

Layer 3 blockchain

The third layer consists of the roof and the surrounding area.

When creating apps and using blockchain technology, L3 incorporates the visual user interface component to create use cases that can be used by average people.

They are often referred to as Dapps.

Important characteristics

Improve the usability of blockchain technology.

Provide clear use cases for a typical end user.

Important for broad acceptance.

Uniswap, Curve and Opensea are some examples.

You can probably hear about them on a number of levels with regards to the solutions it provides.

Since they have so much information to handle, layer-1 struggles to maintain speed and scalability.

This is especially true since expansion requires either granting security or decentralization (Vitalik Buterin defined this as the “blockchain trilemma”).

As more and more individuals join the blockchain ecosystem, L1s have a harder and harder time keeping up with transactions.

Users are forced to choose between paying exorbitant fees and having to wait hours – or even days – for their transactions to be validated.

A number of solutions have been offered in response.

Examples of layer 1 solutions include slicing, block size, and modifications of the consensus mechanism (such as forks).

Examples of layer 2 solutions include state channels, nester blockchains, sidechains, optimistic rollups, zero-knowledge rollups, Plasma, and Validium.

Conclusion

There are several ways to share the various blockchain technologies and the developing industries they support.

As you continue to study and explore, be aware of efforts that support tokens and be aware of activities that are just looking to sell tokens.

Understanding the sophisticated technology behind each project and assessing the value it stands to deliver is necessary to understand the noise flood of the blockchain industry.

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