Blockchain Layers Explained: L1, L2, L3
Introducing blockchain to elevate our financial systems drives passion and high expectations. Over time, this system has proven efficient by removing reliance on intermediaries in several industries, improving transparency, and eliminating coerced trust. Hence, blockchain is not simply a tech tool for decentralized finance; it has witnessed adoption in notable spaces like the gaming industry, supply chain infrastructure, and real estate.
Understanding blockchain development requires that we follow the growth process from the early blockchains (Layer 1) to the development of scalable blockchains (Layer 2) and the introduction of highly customizable chains (Layer 3).
Why we have L1, L2, and L3
The need for blockchain layers is found in the popular notion that a system such as a blockchain cannot possibly resolve these trilemma and achieve Scalability, Decentralization, and Security all together. Hence, it is expected that blockchain must sacrifice one of the three. However, the interplay of these three features is required for a functional and super efficient blockchain.
- First, a blockchain must be scalable enough to facilitate transactions with high throughput.
- A blockchain must be secured enough to ensure data immutability and asset protection.
- Decentralization is core to blockchain because its introduction is based extensively on its ability to eliminate the concentration of system management in the hands of a few entities, thereby reducing the risk of censorship.
Blockchain evolved from one layer to another to present developers with all three functionalities. Build on any of these layers using the Chainnodes' sophisticated and user-friendly service. As a leading blockchain RPC and node provider, Chainnodes allows dApp developers to navigate application development smoothly. Get free access to all the tools required to build your Layer 1 or Layer 2 dApp or enjoy a dedicated Node for The Graph for streamlined data to rely on when building web3 dApps.
Blockchain Layers Explained
- Layer 0
This layer connects the different functionalities that makeup Layer 1 chains. With blockchain components like hardware, internet, and connection, Layer 0 makes it possible for developers to create and run Layer 1 blockchains like Bitcoin and Ethereum.
Why Layer 1?
The answer to this question is simple, while Layer 0 functions as the base for Layer 1, it is more like a combination of tools to create the actual blockchain.
- Layer 1 Blockchain
Popular L1 blockchains like Bitcoin and Ethereum bring features like immutability and decentralization. This allows users to enjoy a system where data integrity is duly preserved and management is taken from the hands of centralized entities.
Layer 1 blockchains also serve as the foundational level for layer 2 blockchains, providing L2 chains with consensus mechanisms, programming languages, and other core structures like block timing and even dispute resolution mechanisms.
However, the issue of scalability remains a significant downside of L1 chains.
To resolve these issues, Ethereum switched from the Proof-of-Work consensus mechanism to the Proof-of-Stake Mechanism.
Another approach adopted by the L1 blockchain to enhance scalability is sharding. By dividing tasks into smaller chunks, the network efficiently manages validation.
Why Layer 2?
One notable disadvantage of L1 blockchains is the inability to process transactions at high speed. Hence, when adoption increased, it became apparent that scalability cannot be a trade off if blockchain is to remain attractive to users.
- Layer-2
Layer 2 solution refers to third-party networks built on the Layer 1 structure. For example, Lightning Network is a Layer2 protocol built on the Bitcoin blockchain, while L2 protocols like Rollups enhance Ethereum scalability. L2 chains enjoy the security and decentralization of Layer 1; however, by taking a significant part of the transaction from the main chain and processing that offchain, both Layer1 and Layer2 chains can handle transactions faster.
Another notable feature of Layer 2 chains is reduced transaction fees (gas fees). While transactions on Layer 1 blockchains like Ethereum attract high gas fees, users can transact cheaply on Layer 2 protocols.
Why Layer 3?
While Layer 2 chains considerably resolved the scalability issue, navigating the multiple blockchains remains expensive for savvy cryptocurrency traders. For instance, the lack of interoperability when switching from one blockchain to another makes it impossible to swiftly perform transactions like swapping tokens from blockchain A to B.
- Layer 3
Layer 3 blockchain is the application layer of a blockchain solution. Built on L1 and L2 chains, it enjoys scalability, decentralization, lower cost, security, and immutability.
Distinctively, L3 presents a user-facing interface where the complexity of blockchain technology is masked under an easy-to-use network structure.
Leveraging the existing blockchain infrastructure, Layer 3 chains can develop decentralized applications and DeFi tools that are highly interoperable and quick to use.
Conclusion
The current state of blockchain is nothing but a testament to what gradual innovation can do to any system. While the early adoption age was characterized by system congestion and slow or failed transactions, recent developments like state channels, rollups, and customizable chains facilitate cross-border transactions without delay.
As blockchain evolves, adopting an easy dApp development structure becomes an essential for developers. Working with Chainnodes RPC allows developers to leverage blockchain infrastructure with a free archival, starter package, and 24/7 support for dApp development.