A Beginner's Guide to Understand L0, L1, L2, L3
A Beginner's Guide to Understand L0, L1, L2, L3

A Beginner's Guide to Understand L0, L1, L2, L3

A Beginner's Guide to Understand L0, L1, L2, L3


Many crypto lovers are familiar with the entire structure of Layer 1, such as BTC, ETH, and SOL. However, only some people realize the other layer features in the blockchain area, such as Layer 0, Layer 2, and Layer 3. It will be great to spend some time understanding the basic knowledge of all Layer Structures at once instead of working hard on the technical code details. Review the article content below to acquire the foundation Layer Structure knowledge to optimize your future crypto investment decisions and strategies.

What are Layers?

First of all, we can classify six layers based on the architecture of the blockchain system, which are the Data Layer, Network Layer, Consensus Layer Incentive Layer, Contract Layer, and Application Layer.

  • Data layer is decentralized and needs to be maintained by all nodes together.
  • Network Layer is an extensive decentralized peer-to-peer network formed by all the nodes in the blockchain.
  • Consensus Layer requires consensus mechanisms to maintain data consistency including PoW, PoS, and DPoS.
  • Incentive Layer is the incentive mechanism that packs blocks for crediting rights.
  • Contract Layer relies on smart contracts without the interference of third parties.
  • Application Layer is the technology development and extension of multiple application solutions.

When we understand that layers are different levels delineated by the basic structure of a blockchain system, they have different functions and application technologies among each other. The Data Layer and the Network Layer are the bottom layers of the blockchain system. Above them are the Consensus Layer, Incentive Layer, Contract Layer, and Application Layer constitute the blockchain protocol. We can divide the blockchain system according to its structure from the bottom: Layer 0 to Layer 3.

Layer 0: Data Layer, Network Layer

The current Layer 0 has two semantics, one is cross-chain communication, and the other is modular blockchain. First, Layer 0 can solve the communication interaction problem between multiple chains and realize innovative products such as cross-chain protocols and multi-chain DEX/Loan/Intelligently scheduling computing power. Secondly, Layer 0 can also modularize the layers of blockchain and encapsulate them clearly, and then we can combine Layer 0 in the way of building Layer 1 blocks (that's why it is called Layer 0). Its representative protocols are: LayerZero, Wormhole, Cosmos, and Celestia, and the core project of LayerZero, STG, has recently gone exponential.


Layer 1: Consensus Layer

Layer 1 is the most familiar layer at present. Most of the public chains we have come across are Layer 1, including BTC, ETH, SOL, and other public chains, such as APT, which have been rising recently.


Layer 2: Incentive Layer, Contract Layer

Layer 2 mainly refers to the Rollup Scaling Solution for Ether. Due to the execution of transactions in Ether delay, we have devised a solution to put the execution of transactions on Layer 2 and then send the results of the trades to Layer 1 after compression. Layer 2 can significantly save bandwidth and increase throughput without modifying Layer 1 itself, while Layer 2 can ultimately inherit Layer 1 security, which is a perfect solution to the problem of Layer 1 transaction congestion.


Layer 3: Application Layer

There are two main streams on Layer 3 in the current blockchain area: zkSync and StarkNet. One key difference between zkSync and StarkNet is that they utilize different proofing protocols, SNARKs ( Succinct Non-Interactive Argument of Knowledge) and STARKs (Scalable Transparent ARguments of Knowledge). The fundamental differences between SNARK and STARK proofs lie in their setup procedure, scalability, and quantum computer attack resistance. There is a hypothesis that Layer 2 can scale Layer 1, and Layer 3 can overlap Layer 2 for further scaling. If Layer 2 is a generic application layer and generic scaling, then Layer 3 can be called a customized application layer and customized scaling. Layer 3 is a relatively new concept, especially for zkSync and StarkWare, and is worthy of investors' attention.


A useful analogy to distinguish the difference between Layer 0-3


Layer 0 has hardware, protocols, and other foundational elements. It is like intercity high-speed rail, which connects different cities conveniently and quickly.

Layer 1 maintains the blockchain's dispute resolution, consensus mechanism, and programs such as Bitcoin and Ethereum. We can consider Layer 1 as a prosperous city. The more congested the roads become, the more likely they will get stuck in traffic.

Layer 2 has better scaling capabilities than Layers 0 and 1 to integrate with third-party solutions. We can describe Layer 2 as an elevated road, allowing everyone to travel at high speed and significantly reducing the pressure on surface roads.

Layer 3 hosts dApps and other user-facing applications. The primary function of Layer 3 is to provide a point-to-point highway built on top of the elevated road to undertake high-speed direct access to popular routes.


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