The world of blockchain can be complex, with layers upon layers of technology powering its revolutionary functions. While terms like layer-1 and layer-2 are becoming increasingly familiar, being protocols that are continuously refined, a new player has emerged on the scene. Known as layer-0, it's a blockchain protocol that acts as the foundation for many of the coins and tokens we trade today.
Keen to learn how it fits into the blockchain ecosystem? From uncovering the nuances of layer-0 blockchain protocols to highlighting some of today's successful examples of layer-0 blockchains, here's our guide to understanding the technology.
A blockchain refresher
Before delving into layer-0, let's revisit the basics of what a blockchain is. For anyone new to blockchain technology, a blockchain is essentially a public digital ledger of transactions that's distributed and secured using cryptography. Blockchains primarily consist of five layers: the hardware infrastructure layer, the data layer, the network layer, the consensus layer, and the application layer. For the blockchain to function effectively, these five layers must perform their unique functions. This includes duties like storing transaction details to making sure all network nodes are in consensus before validating transactions.
Understanding the different blockchain protocols
When educating yourself about blockchain technology, you'll likely come across terms like layer-1 and layer-2. These are names that represent different types of blockchain protocols, with layer-1 and layer-2 blockchain protocols each serving distinct purposes within the overall ecosystem. While layer-1 and layer-2 tend to be more well-known within the blockchain community because of examples like Ethereum and Polygon, layer-0 is becoming increasingly popular for its focus on scalability and interoperability between blockchains. Let's first understand what each of these blockchain protocols specialize in.
Layer-1 blockchain protocols
The blockchain protocol most people are likely familiar with is layer-1, given that coins are what's partially driving their interest in the crypto market. From Bitcoin to Ethereum, these blockchains are the ones often making headlines whenever a halving or major network upgrade is due.
In essence, layer-1 blockchains are considered independent networks and are in charge of handling duties like processing transactions, employing robust cryptography to secure the network, and block creation. Unfortunately, with increasing demand from users, these mainchains tend to get congested, leading to slower transaction speeds and higher gas fees. That's where scalability solutions like layer-2 come into play.
Layer-2 blockchain protocols
Layer-2 solutions are built on top of existing layer-1 chains and specialize in scalability to ease the load on layer-1 blockchains. If we liken layer-1 to a busy road filled with cars, layer-2 would be the handy extra lanes that help to ease the congestion off the main pathway that is layer-1. By handling transactions off-chain, transaction bottlenecks are reduced on layer-1, leading to a smoother and faster experience for all users interacting with the blockchain.
Layer-0 blockchain protocols
Layer-0 protocols are the infrastructure upon which entire layer-1 chains are built. These protocols define the core architecture and communication rules between different blockchains, allowing them to interact and share data seamlessly. By working on existing layer-1 issues like the lack of interoperability and scalability bottlenecks, layer-0 helps solve the inflexibility caused by layer-1 networks with monolithic blockchain architectures. Thanks to their modularity, purpose-specific blockchains can be customized to the needs of the community.
How does layer-0 work?
Layer-0 blockchain protocols work with a sidechain-based architecture. This is made up of three components:
A mainchain that helps with the transfer of data between the various layer-1s built atop the layer-0.
Sidechains are application-specific layer-1s connected to the mainchain.
The interchain communication protocol acts as a standard for data exchange among the layer-1s.
To illustrate this better, let's use a prominent layer-0 blockchain like Polkadot as an example.
Polkadot has a relay chain acting as its mainchain. Parallel chains, or parachains, are application-specific layer-1 sidechains operating on the relay chain. Its cross-consensus message passing, or XCMP, is a network-layer protocol that allows for interoperability and communication between consensus systems.
Benefits of a layer-0 blockchain protocol
Scalability: By offloading transactions to different layers, layer-0 improves overall network efficiency and handles larger volumes without compromising security.
Customization: Developers can build specialized layer-1 chains tailored to specific needs, leveraging the interoperability provided by layer-0. This can range from layer-1s specializing in handling GameFi to ones which are proficient in decentralized applications (DApps).
Innovation: The modularity of layer-0 fosters rapid development and experimentation, encouraging new functionalities and applications within the blockchain space. One example would be the Venom blockchain, which makes use of dynamic sharding to dynamically adjust the number and size of shard chains to meet the needs of the current load it's experiencing.
Layer-0 vs layer-1: how different are they?
The immediate comparison any blockchain enthusiast would consider is between layer-0 and layer-1.
Similarities
On a fundamental level, layer-0 and layer-1 are similar in that they're both blockchain solutions that aim to maximize the benefits of a decentralized network while working within the limitations of the blockchain trilemma. These include:
Decentralization: Both layers prevent a single entity from controlling the network by distributing a network's governance and operations among multiple nodes.
Security: Both layers prevent tampering of blockchain integrity and data by employing robust cryptographic techniques to maintain overall security.
Scalability: Both layers attempt to maximize throughput by processing transactions, storing data, and reaching consensus as additional users are added to the network as quickly as possible.
Operating with full transparency: Any user with access to a blockchain explorer tracks transactions and verifies the state of the blockchain networks.
Differences
Blockchain goals aside, that's where the similarities end. Here are some differences worth highlighting between layer-0 and layer-1:
Fundamental utility: Layer-0 and layer-1 blockchains play different roles in the overall blockchain ecosystem. Layer-0 targets the underlying infrastructure for building blockchains, while layer-1 directly handles transaction processing and consensus mechanisms. While they might be different, this doesn't mean their roles can't be complementary. Layer-0's interoperability facilitates the creation of interconnected blockchain networks, while layer-1's core operations make sure of the security and efficiency of individual blockchains. This synergistic relationship paves the way for a more advanced and interconnected blockchain ecosystem overall.
Scalability: Layer-0 and layer-1 blockchains handle scalability differently. Layer-1 blockchains have long been facing scalability issues given how they're built monolithically, which creates gaps for bottlenecks to occur. By encouraging interoperability between different layer-1 blockchains, transactions can be effortlessly routed across multiple chains. This effectively increases overall transaction throughput of the blockchain ecosystem without the need for sharding or sidechains to handle increasing transaction volume and demand.
Flexibility: Compared to layer-1 blockchains, which are more rigid in their design because of specific consensus mechanisms and data storage structures, layer-0 blockchains thrive on flexibility. This ultimately allows for the creation of diverse layer-1 blockchains that leverage the adaptability of layer-0 with varying features and capabilities. This flexibility stems from their ability to define the rules for how different layer-1 blockchains can interoperate and communicate with each other.
Examples of popular layer-0s
Some of the leading layer-0 protocols include:
Avalanche and its AVAX coin: Avalanche powers multiple layer-1 chains with its mainchains, the P-chain, X-chain, and C-chain. Each mainchain tackles specific tasks, optimizing performance and catering to different user needs, ultimately contributing to a robust and dynamic blockchain platform. Thanks to its high transaction speeds, low fees, strong security, and developer-friendly tools, Avalanche is today considered the ideal platform for building and playing GameFi projects.
Cosmos and its ATOM coin: Often referred to as the "internet of blockchains", Cosmos is a layer-0 focused on modularity and developer flexibility. With its newest white paper, the Cosmos community is set on making its mainchain, the Cosmos Hub, serve as a template for building blockchains into the Cosmos ecosystem. Thanks to the interconnected Cosmos ecosystem, we have the likes of popular layer-1s like BNB Chain and Cronos.
Polkadot and its DOT coin: Polkadot is another layer-0 that allows diverse blockchains to operate collaboratively through its mainchain, the Relay Chain. With a focus on passing on the security benefits of the relay chain's Nominated proof-of-stake consensus mechanism, Polkadot's mission is to provide a secure and scalable platform for building specialized blockchains for specific use cases.
Curious to find out more about what makes each layer-0 blockchain tick? Here's a handy table that you can refer to when exploring their similarities and differences.
Avalanche | Cosmos | Polkadot | |
|---|---|---|---|
Mainchains | P-chain, X-chain, and C-chain | Cosmos Hub | Relay Chain |
Cross-chain technology | Avalanche Warp Messaging | Inter-Blockchain Communication | Cross-Chain Message Passing |
Development toolkit | Avalanche-CLI | Cosmos SDK | Substrate |
Notable projects | Trader Joe, Shrapnel | Secret Network, Juno | Moonbeam, Acala |
Summary of differences | Speed, security, and scalability for specific applications | Flexible blockchain creation and caters to diverse needs | Interoperability and specialized parachains for complex solutions |
The final word
With the runaway success of layer-0s like Cosmos, Polkadot, and Avalanche, some blockchain enthusiasts are hailing layer-0 as a huge paradigm shift in the way we conceptualize and build blockchains.
By addressing the scalability and interoperability challenges present in some of today's popular layer-1 blockchains, layer-0 protocols act as the foundational infrastructure, enabling interoperability and scalability through modular sidechains and specialized communication rules. This fosters a more dynamic and interconnected blockchain ecosystem, where diverse, customizable layer-1s built on top of foundational layer-0s cater to specific needs, and lay the groundwork for a future of interconnected blockchains.
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