If you have worked in the world of Blockchain and Cryptocurrency, you have undoubtedly come across concepts such as Blockchain layers and Layer-1 and Layer-2 blockchains. And you may not be familiar with blockchain layers and their types. Blockchain is a unique combination of technologies such as distributed ledger (DLT), cryptography, gaming, network, etc. . under which you can design and run powerful applications, including cryptocurrencies.
Distributed ledger technology, of which Blockchain is an example, has created the ability to sufficiently confirm and validate existing information through encryption between a set of users and network protocols without the intervention of a central and controlling entity. The integration of these technologies has created trust among network operators and allowed them to exchange money and information on the blockchain platform.
Blockchain technology has several layers, aiming to establish network security and scalability at the desired level. Since the government or a specific company does not manage blockchain networks, this technology must have high protection. Also, blockchains must be scalable to maintain their proper functionality as the number of users and information available grows. The reason for the formation of blockchain layers is the need to enhance scalability and maintain security at its highest level.
In this article, we will examine what the blockchain layers are, what types they are, and how each one works. But first, it’s better to get acquainted with blockchain tees, which are the main goals of this technology.
Blockchain Layers and Blockchain Trilemma
Around the three-way challenge of blockchains, which consists of decentralization, security, and scalability, there is a theory that a blockchain network can only have two of these features simultaneously. This theory is derived from the CAP hypothesis, invented in the 1980s, which shows the importance of factors such as system consistency (Consistency), information availability (Availability), and maintaining performance in the event of a part of the system failure (Partition Tolerance). According to the CAP theory, decentralized storage spaces such as Blockchain can only have two of the features above.
Today, the blockchain tee is an evolved form of the CAP theory that belongs to distributed networks and represents the general belief that the infrastructure of public blockchains is such that they are forced to sacrifice one of the three characteristics of decentralization, security, or scalability. In this way, the best performance of blockchain technology will be when it forms an extensive decentralized network with impenetrable security that can process information and transactions at the scale of the global Internet and Web 3. In the following, we will give a brief definition of these three features:
• Blockchain scalability refers to the ability of this technology to manage a large volume of transactions at high speed.
• Security in Blockchain is the network’s resistance level against various attacks, such as double-spending and protection of existing information.
• Decentralization is also a form of creating redundancy and copying, ensuring that the network is not under the control of a small number of users or nodes.
What is the structure of blockchain layers?
Since there is no central controlling entity in a blockchain network, all transactions and information are protected and stored in a ledger in a highly safe way that all people can access and confirm their authenticity. Such a decentralized system follows a specific protocol and requires an “agreement” or “consensus” reached by computers active in the network (Nodes) to validate transaction information. Blockchain nodes are constantly adding and checking information and changing network data.
A particular architecture and blockchain layers implement the unique transaction verification technique. The actors of a blockchain network process validate and update the relevant information among its different layers. The structure of blockchain layers is reflected in the blocks containing network transactions and their exact arrangement. As you might expect, blockchain layers can be designed as public, private, or consortium-based.
Now, the question here is, what is the exact definition of blockchain layers? In general, each blockchain network consists of 5 layers with their characteristics and tasks: hardware layer or infrastructure (Hardware Layer), data layer (Data Layer), network layer (Network Layer), consensus layer (Consensus Layer), and Application Layer (Application Layer).
These layers have turned Blockchain into a complete solution for implementing data management systems in the back-end field to consumer-specific applications in the front end. In the following, we explain the definition of each of these blockchain layers.
The hardware layer is one of the layers of the Blockchain.
The first layer of blockchain layers is called the hardware or infrastructure layer. The information of a blockchain can be stored in individual nodes or a server in a database. This model requires a client-server structure so that users can get the content or information they need from the respective servers when browsing the web or using an application. When we use a blockchain application, the client-side system sends a request to access information to the server.
Since blockchains are peer-to-peer networks (Peer-to-Peer / P2P) to share information, they connect each client to that client’s counterpart (Peer Client). As a result, all data, transactions, and other information are stored in decentralized databases. In this way, the hardware layer or blockchain infrastructure is a vast network of different devices that communicate and exchange information. This is how a distributed ledger is built.
The data layer is the second layer of the Blockchain.
The second layer of blockchain layers belongs to the data and information available in the network. The blockchain data structure consists of interconnected blocks; transactions are stored chronologically in each block. This structure includes two main elements: pointers and a linked list. A linked list is a blockchain containing information and a pointer to the block before it. Pointers are also variables that indicate the position of another variable.
In the meantime, there is also a structure called the Merkel Tree, a binary tree of hashes. Each block contains the root of the Merkel tree hash and information such as the previous block’s hash, timestamp, nonce, block version number, and the current difficulty target in the network. This method has ensured security, data integrity, and the absence of mistakes in the blockchain network.
When the nodes have validated a certain number of transactions, their information is grouped as a block up, loaded to the Blockchain, and connected to the previous block. The chain of blocks is formed in this way and is added to it every day. Each transaction in the blocks is digitally signed through the private key of the sender’s wallet. Since the corresponding private key is only available to the sender, the existing information cannot be changed. In addition, the digital signature is encrypted for greater security and privacy of the user, and this stage of information registration is called the final stage.
Network Layer (Network Layer) in blockchain layers
The network layer in the blockchain layer is the place where the internal codes of different parts communicate with each other. This part is also called the P2P layer or Propagation Layer. The network layer manages the release of blocks, transactions, and access to them. A peer-to-peer (P2P) network is a computer network in which multiple nodes are distributed, and the network’s operational load is divided between them to achieve a common goal.
In this P2P layer, it is ensured that nodes can communicate with each other and can also share and synchronize information with each other to maintain integrity across the blockchain network. Nodes are responsible for processing transactions in the Blockchain.
A conceptual image of blockchain layers in the world of Web 3 and cryptocurrencies
Consensus Layer
The consensus layer is known as the heart of the blockchain layers. This layer is where a critical process in the Blockchain occurs: the implementation of the Consensus Algorithm and the agreement between nodes. This consensus or agreement was decentralized, and there was no need for a center to implement it.
This part forms the core and heart of decentralization in a blockchain, which is why many nodes process each transaction, and all of them must agree on the validity of that transaction. No node alone can control the information of a transaction, and if this layer stops functioning and fails, the entire blockchain system will fail.
In this layer, the leading blockchain protocol is managed, which includes applying a minimum number of nodes in the network to validate each user’s transactions or cryptocurrency balance. One of the most critical issues and challenges faced by the consensus layer is to ensure that there is only one true and correct version of the state of the network and nodes at any time and that no one is manipulating the network information.
Application Layer
The blockchain layers we have discussed so far form a complete computer network of a blockchain. Developers can design their applications above the four mentioned layers in the fifth layer, the application layer, so that the relevant Blockchain can implement them. The applications built in this layer have the main features of the Blockchain. The application layer has applications that users use to communicate with the blockchain network through their devices. This layer acts similarly to the user interface and the front-end part of an application; other layers play the role of the application’s back-end.
Strictly speaking, the main components of the application layer include script or application codes, application programming interface or APIs, user interface (UI), frameworks, smart contracts, and decentralized applications. Or become DApps.
The application layer is divided into two other layers: the application layer and the execution layer. Smart contracts, related principles and regulations, and blockchain code are all part of the execution layer, and each layer has its particular task in processing a transaction. The transaction starts from the application layer and reaches the execution layer, where it is validated.
Types of blockchain layers
Blockchain technology stores information and focuses on its security. Blockchain layers are networks that advance the process of completing transactions and maintain this process correctly. When digital currencies faced challenges such as scalability, developers felt the need to design blockchain layers, and today, we see that various projects and networks in the cryptocurrency industry operate as a Blockchain layer. Blockchain networks are known with four layers, indicated by numbers and called layers 0, 1, 2, and 3.
You must have predicted that layer 0 includes the Blockchain and its constituent components, i.e., the related hardware, the Internet, and other physical and digital communications. Coating 0 solutions, or layer 0 blockchains, have helped networks such as Bitcoin (BTC), Ethereum (ETH), and others to maintain their functionality and, for example, when the Blockchain is congested, buying and selling Ethereum flows. Go through your normal.
Also, the ability to interact and communicate between different networks is implemented in layer 0, which facilitates the flow of information from the highest layer to the lowest layer of a blockchain. After some time of designing and implementing layer 0 for blockchains, other layers were added to improve the performance and solve the current problems of this technology, which we will discuss below.
Layer one Blockchain (Layer-1)
When all network actors agree on the current state of the Blockchain and its information, they can perform the necessary calculations in a verifiable and guaranteed way in the Blockchain’s Compute Layer. The calculation and consensus layers are generally combined in blockchain networks, and their combination has created a blockchain layer.
When talking about implementing the Polygon / MATIC network on the Ethereum blockchain, we are referring to the layers of the Ethereum and Polygon blockchains. In layer one, which is Ethereum in this example, processes such as managing the consensus mechanism, programming languages, scheduling the formation of blocks, determining the time to reach an agreement, and the regulations and performance parameters of a blockchain take place. Bitcoin is another example of a layer one blockchain. In this layer, the network’s security is provided through the immutability and impenetrability of the information in it.
However, blockchain layer one has faced challenges related to scalability and has been progressing and evolving in recent years. With the increase in the number of users of a blockchain, layer one is under pressure, and here, the consensus process causes the speed of the entire network to decrease. Despite the security throughout the network, the decrease in rate is a negative factor for it. As a result, miners working to solve cryptographic algorithms will need more computing power. Among the solutions created to solve the speed problem in the first layer of the Blockchain are the Proof-of-Stake (PoS) mechanism and sharding technology.
Layer 2 of the Blockchain (Layer-2)
Layer two is the process of combining a third-party network with layer one of the Blockchain to address problems related to scalability in other layers of the Blockchain, which is often done by increasing the number of network nodes. Layer two consists of several different networks implemented on top of the primary layer of a blockchain network.
Usually, the protocols that provide a solution to the scalability challenge of a blockchain through the second layer remove the processing of some processes and operations from the leading layer of the network and, in this way, strengthen the operational capacity of the respective Blockchain. One of these solutions is intelligent contracts that process transactions while maintaining the relevant rules and regulations outside the leading network or layer one.
Each transaction is stored in the first layer of the Blockchain, and a lot of time is spent on their processing, while in the second layer, the relevant information is finally stored in the first layer, but in a batch. Hence, their processing time and the operational load of a blockchain layer are reduced. Layer 2 protocols have become very popular in recent years and are one of the most efficient approaches to scaling problems, especially for Proof-of-Work / PoW networks.
Nested Layers, Rollups, and Sidechains are examples of layer two architectures for layer one blockchains. Bitcoin Lightning Network, Polygon, and Optimism (Optimism / OP) are layer two solutions built on Bitcoin and Ethereum blockchains.
Layer 3 of the Blockchain (Layer-3)
The application layer, which we discussed in the section on the structure of blockchain layers, forms layer 3 of a network. This layer is where applications and their execution protocols are implemented. Layer 3 can be considered a user interface that covers an application’s communication and technical channels from the user’s point of view. This layer creates an application in the relevant Blockchain and allows interaction between the developers of different projects.
Layer 3 makes interoperability between different blockchains and other core blockchain layers easy and cost-effective, providing users with personalized features and capabilities. The layer three protocol focuses on interoperability, that is, establishing more accessible and more optimal communication between layer two and layer one of blockchains. This layer is one of the main layers of Blockchain and plays the role of facilitator between other layers. It should be noted that the entire layer three system of a blockchain does not need any intermediaries.
Blockchain technology was the first platform on which the ability to execute digital currency transactions was created. But after a few years, it faced problems, the most important of which was the increase in the number of transactions and the decrease in network scalability. This issue led to the need to implement different layers in the Blockchain that work independently, But they advance this function under the security of the respective Blockchain.
Blockchain raises the first level of validity and reliability of transactions, But it faces challenges such as network congestion and a long time to settle transactions. Layer 2 solutions were implemented to improve these and focused on enhancing blockchain privacy and scalability. These two layers were enough to maintain excellent and correct network operation, But they continued to operate independently and separately. The third layer of the Blockchain was introduced to establish the connection between them, whose task is to interact between the layers of the Blockchain and run decentralized applications.
The most important questions about blockchain layers
What does Blockchain mean?
Blockchain is a digital database. This database is shared on an extensive network containing many computers and is entirely accessible to the public.
What are the currencies of the first layer?
Among the most essential and top currencies of the first layer are Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Ripple (XRP), Solana (SOL), Toncoin (TON), and . . . named
What are blockchain algorithms?
The Consensus Algorithm in Blockchain is the way to establish an agreement between network nodes to confirm transactions and existing information and ensure security in Blockchain.
What is the first layer of Ethereum?
The first layer of Ethereum is the Blockchain and the primary protocol of Ethereum, which consists of a decentralized network of nodes to confirm transactions, execute smart contracts, and implement layer two solutions such as Polygon on its platform.
Best layer’s definition
How about 5 type . I don’t understand