Blockchain, as the underlying technology, has a total of seven layers of architecture: the transport layer, data layer, network layer, consensus layer, incentive layer, contract layer, and application layer. These seven layers correspond to layer0, layer1, and layer2.
Layer0 Transport Layer
Corresponds to the bottom layer of the model, mainly involving the interaction and integration between blockchain and traditional networks.
Layer1 On-chain Scalability
Includes the data layer, network layer, consensus layer, and incentive layer, referring to the scalability solutions implemented on the underlying blockchain protocol.
Layer2 Off-chain Scalability
Refers to the contract layer, which does not change the underlying blockchain protocol and basic rules, but improves transaction processing speed through solutions such as state channels and side chains.
Layer3 Client Application Layer
Refers to the application layer, which is the UI platform for users to interact with blockchain technology.
Layer0#
L0 is the ground floor, where the internet and hardware connections exist, including the hardware, protocols, connections, and other components that make up the foundation of the blockchain ecosystem. Layer 0 acts as the network architecture for the underlying blockchain. Layer 0 also enables cross-chain operability, allowing blockchains to communicate with each other. It provides a critical backbone network to address the scalability challenges of future layers. Layer 0 typically uses native tokens for participation and development.
Layer 0 blockchain projects include: Polkadot, Avalanche, Cardano, and Cosmos, among others.
Layer1#
Layer 1 blockchain represents the actual blockchain, where transactions are processed and completed on its own blockchain (such as Bitcoin and Ethereum). It is responsible for executing most of the tasks related to maintaining the basic operations of the blockchain network, such as consensus mechanisms, programming languages, protocols, and restrictions. This is where things like consensus (PoW, PoS) and all technical details such as block time and dispute resolution operate. The three most important aspects of the first layer are the blockchain trilemma being overcome: decentralization, security, and scalability. However, so far, no blockchain has been able to effectively solve all three of these problems simultaneously.
Layer 1 blockchain projects include: Ethereum, Binance Smart Chain, Bitcoin, and Solana, among others.
Layer2#
Layer 2 is a third-party integration used in conjunction with Layer 1. The main purpose of Layer 2 is to improve the productivity, scalability, and transactions per second (system throughput) of the blockchain. Layer 2 scaling solutions are the most effective way to address scalability issues in PoW networks.
①Nested blockchains, where a nested second-layer blockchain runs on top of another. There can be multiple blockchain layers on a single main chain. ②State channels. Facilitate bidirectional communication between the blockchain and off-chain transaction channels, thereby increasing the overall transaction capacity and speed. It is a network adjacent resource protected by mechanisms such as multi-signature or smart contracts.
③Sidechains. Sidechains are transaction chains that run alongside the blockchain and are used for bulk transactions. Sidechains have their own consensus methods, which can be adjusted for speed and scalability, and utility tokens are often used as part of the data transfer mechanism between sidechains and main chains.
④Rollups are second-layer blockchain scaling solutions that execute transactions outside the Layer 1 network and then upload the data from the transactions to the Layer 2 blockchain. The security of the aggregation can be guaranteed by the data being on the underlying layer.
Layer3#
Layer 3 is the layer where participants ultimately interact with the user interface. When using Layer 1 and Layer 2, this layer aims to provide simplicity and usability for overall functionality. Layer 3 not only provides a user interface but also provides utility in the form of on-chain and cross-chain operability. Decentralized applications (dApps) are a type of Layer 3 interface that provides real-world applications for blockchain technology. Other examples include decentralized cryptocurrency exchanges such as Pancakeswap and Uniswap.
Summary
If we use an analogy to describe L0-L3:
L0 is a city, and the more prosperous the city's construction, the more congested the roads become, making traffic jams more likely;
L1 is an elevated highway that allows everyone to travel at high speeds and greatly reduces the pressure on the ground roads;
L2 is an intercity high-speed rail, facilitating fast and convenient connections between different cities;
L3 is built on top of the elevated highway and establishes point-to-point high-speed channels specifically for popular routes.