Blockchain Layer 2

In addition to the structure of chains and blocks, Blockchain also includes many different layers. Let's learn about the Layers of this technology.

Structure of Blockchain

When it comes to the layers of Blockchain, there are two ways to understand this concept.

The first way is through Blockchain architecture layers, which consist of five layers:

Hardware layer, data layer, network layer, consensus layer, and application layer.

The second way is the division of the Blockchain network based on the protocol.

Protocol refers to the set of rules governing a network.


The Blockchain protocol is made up of four layers - Layer 0, Layer 1, Layer 2, and Layer 3.

Blockchain architecture layers

Hardware layer - The framework of technology

The first layer of the Blockchain consists of hardware similar to network connections, computers in the network, and data servers.

The data inside the Blockchain is stored by servers, and computers on the Blockchain network can share this data with each other.

This leads to the creation of a P2P (Peer to Peer) network where information is verified by individual nodes (or computers) on the network.

Data Layer - Contents contained in Blockchain

The second layer of this house is the data layer, which manages the information stored on the network.

This layer is made up of blocks of information with each block connected to the previous layer.

The only block that is not linked back to another is the Genesis block (the first block in the network).

Each transaction written on these blocks is protected through a private and public key.

The private key is a digital signature known only to the owner to authorize the transaction, while the public key is used to verify who signed the transaction.

Simply put, if someone sends you some cryptocurrency, they will need to know your public key.

To receive cryptocurrency, you must use your private key to verify the transaction and prove ownership of your Blockchain wallet.

Network Layer - The link between two blocks in the chain

The network layer, commonly known as the P2P layer, is responsible for communication between nodes.

Blockchain transactions are performed by nodes.

This P2P layer ensures that nodes can find each other, interact, and synchronize to keep the Blockchain network active.

With a P2P network, nodes are distributed and share the network's workload to achieve a common purpose.

Also in this layer, blocks are created and added to the Blockchain, hence this layer is also known as the propagation layer.

Consensus layer - the most important and necessary layer in any blockchain

This layer ensures that the rules are effectively enforced to maintain uniformity in the network.

A node cannot add only one transaction to the Blockchain.

To do so, all nodes in the network need to agree on it.

This level of verification reduces the risk of fraudulent transactions being added to the Blockchain.

Application layer - multiple uses of Blockchain

This layer facilitates the use of Blockchain for various purposes.

It is made up of smart contracts and decentralized applications (DApps).

This layer acts as the interface of the Blockchain and is basically what users often encounter when operating in a Blockchain network.

Blockchain protocol layers

Layer 0 - The foundation of other layers

Layer 0 is the foundation layer, including the hardware and software that build the backbone of the Blockchain ecosystem.

It is made up of protocols, connections, hardware, miners... that form the foundation of the Blockchain ecosystem.

Layer 0 also supports cross-chain interoperability, allowing Blockchains to communicate with each other.

It provides an important backbone for solving scalability issues in subsequent layers.

Layer 0 typically uses native tokens that provide access to participate and grow.

This layer can be considered the "Internet of Blockchains".

Examples of Layer 0 are Polkadot, Avalanche, Cardano, and Cosmos

Layer 1 - Base Blockchains

Layer 1 Blockchain refers to the main chain of the Blockchain which is simply understood as the original Blockchain architecture.

Binance Smart Chain, Solana, and Kardiachain are examples of Layer 1.

This protocol layer ensures the security of the Blockchain with various consensus mechanisms, like proof of work and proof of stake being part of this layer.

In other words, a protocol is Layer 1 when it processes and finalizes transactions on its own Blockchain.

It also has its own native Token, which is used to pay transaction fees.

A common problem with Layer 1 networks is their inability to scale.

Bitcoin and other significant blockchains have struggled to process transactions during a time of increased demand.

Bitcoin uses the Proof of Work (PoW) consensus mechanism, and this mechanism requires a lot of computing resources.

While PoW ensures decentralization and security, PoW networks also tend to slow down when transaction volumes are too high.

This increases transaction confirmation times and makes fees more expensive.

So the developers came up with a solution to create Layer 2 protocols based on Layer 1 networks for security and consensus.


Layer 2 - Upgrade of Layer 1

As a Blockchain grows, the number of transactions performed on it increases.

Layer 2 solutions capable of handling increased loads were created to support the increased number of transactions.

The common point of Layer 2 is that it is built on Layer 1, thereby inheriting security and data availability from Layer 1.

Layer 2 has the ability to process more transactions, lower costs, and faster transaction confirmations.

Layer 2 improves throughput, gas fees, security, scalability, and functionality.

But actually, each individual solution has its own pros and cons.

In other words, there is no single Layer 2 that currently meets all of these needs.


Layer 3 - Practical Applications

Layer 3 is the last layer visible to the eye.

To put it simply, this is the interface that the user works on.

Layer 3 not only provides the user interface but also provides convenience in the form of inter-chain and internal operability.

Such as through decentralized exchanges, applications that provide liquidity, and staking.

Layer 3 is often referred to as decentralized applications (DApps) that provide real-world applications for Blockchain technology.

The architecture layers of the Blockchain keep the network running while the protocol layers focus on improving the utility of the Blockchain.

Understanding the Layers of Blockchain helps programmers create more and more applications perfecting this technology.

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