Blockchain technology is a combination of various technologies such as mathematical algorithms, cryptography, and encryption-decryption. This combination creates the distributed ledger system we know today. In the operational process of blockchain, there are several layers with different roles. You may have also heard the terms blockchain layer 1 or 2. This article will explain what blockchain layers are, their respective functions, and their differences.

Article Summary

• Blockchain uses a layered system so the system is not centralized within one entity. All layers have different, equally important roles to ensure the network is decentralized.
• There are five layers that act as the technological infrastructure of a blockchain network, from the most basic foundation to the outer layers: infrastructure and hardware layer, data layer, network layer, consensus layer, and application layer.
• Besides the layered system within a blockchain network, the term layer is also used when discussing types of blockchain based on their functions and capabilities. Generally, there are four layers: layer 0, 1, 2, and 3.

What is a Layer in Blockchain?

Blockchain layers are combinations of various technologies that ensure a blockchain network operates optimally. These technologies form the blockchain layers like a building, where each floor manages a specific function.

So, why does blockchain need to use different layers? This relates to the decentralized nature of blockchain where no single entity controls everything. Thus, network functions are separated and distributed across several layers. This separation helps enhance the decentralization, speed, and security of a blockchain. These three aspects are often referred to as the Blockchain Trilemma.

Introducing the 5 Blockchain Layers

Generally, there are five blockchain layers that ensure a decentralized network functions optimally. These five layers are structured hierarchically with the infrastructure layer being the bottom foundation of the network and the application layer at the top.

Structure of blockchain layers. Source: Coin Telegraph

Generally, there are five blockchain layers that ensure a decentralized network functions optimally. These five layers are structured hierarchically with the infrastructure layer being the bottom foundation of the network and the application layer at the top.

Hardware and Infrastructure Layer

The infrastructure layer of blockchain consists of various hardware that helps run the network. Additionally, this layer includes all computer nodes that store blockchain network data. Hundreds of these nodes are connected to each other in a decentralized peer-to-peer (P2P) network. Together, all these nodes form a decentralized network that operates 24 hours a day.

The infrastructure layer of each blockchain has different specifications depending on the network’s needs. Bitcoin nodes are more complex and powerful compared to other blockchains because they require greater computational power.

Unlike centralized networks that are usually concentrated in one place, nodes running the blockchain are spread worldwide. Although scattered, all nodes are connected live and simultaneously exchange information to process all transactions on the network.

Data Layer

Structure of each block. Source: GeeksforGeeks

The data layer is the blockchain layer responsible for storing transaction data since the initial block of a blockchain was added (genesis block). All information about blocks, transactions, and block order is stored in this layer. Additionally, sensitive information such as previous block hashes, timestamps, and Merkle roots that store transaction data are included.

This layer also verifies incoming transactions by requesting digital signatures on each transaction. This is part of the encryption process that ensures the security of all crypto transactions. This digital signature can only be performed by users who have a private key in their crypto digital wallets. You must be familiar with this process if you have used digital wallets like MetaMask.

Network Layer

The network layer in blockchain performs the peer-to-peer (P2P) function. The network layer facilitates communication between all nodes. Additionally, the network layer regulates the creation and addition of blocks and interaction between nodes. This is why the network layer is often referred to as the propagation layer responsible for the block addition process. The network layer ensures nodes can communicate to process transactions and add blocks.

Consensus Layer

The consensus layer is a crucial layer in blockchain operations. Without the consensus layer, the blockchain network cannot verify transactions and no blocks can be validated. This layer is an essential foundation for creating a decentralized network. The main task of the consensus layer is to validate and sort blocks and ensure all nodes reach an agreement on which block to add. If several blocks are created simultaneously due to network congestion, the consensus layer ensures only one block is added to the network.

The consensus layer is adjusted by criteria determined by a blockchain protocol. Each blockchain has requirements to achieve consensus. This layer is also often referred to as the consensus mechanism.

Additionally, many new-generation blockchains add technologies to speed up the block validation process, such as Fantom’s aBFT, Cardano’s DPoS, and NEAR’s Sharding.

Application Layer

The application layer in blockchain consists of various protocols and technologies that directly interact with users. However, this layer can be further divided into the execution layer and the application layer. User interfaces (UI), application programming interfaces (API), and scripts are the application layer used by users. Meanwhile, smart contracts, protocol rules, and the underlying code of applications form the execution layer that executes commands from the application layer.

The application layer usually has an appearance and format similar to websites we commonly encounter. This is done to simplify the user journey for those unfamiliar with using crypto applications.

Blockchain Based on Layers

Blockchain is categorized by layer. Source: Bitazza

You must have heard the terms blockchain layer 1, 2, and even 0. Naming a blockchain based on layers is different from the explanation of the five blockchain architecture layers described above. The layer categorization below relates to the capabilities and functions of a blockchain.

Layer 0

Layer 0 is a category for blockchains that provide developers with tools to build other blockchain networks on top of a layer 0. In other words, layer 0 can be a platform for several other blockchains built on it. It usually serves as the foundation of technology and software (open-source) that other developer teams can customize.

Examples of blockchain networks on layer 0 are Avalanche, Cosmos, and Polkadot. Cosmos and Polkadot have special systems that regulate the blockchain ecosystem above them (Parachain for Polkadot and Zones for Cosmos). The function of layer 0 is to provide software and technology infrastructure so all blockchains above it can work simultaneously and interact with each other. In this context, layer 0 provides network layer and infrastructure technology for blockchains within its ecosystem.

Layer 1

Blockchain layer 1 is a decentralized platform that has the five layers described above. The function of layer 1 is to facilitate various types of transactions and ensure all are processed securely. However, most layer 1 now have smart contracts that allow other applications and protocols to be built on top of them. Therefore, one characteristic of blockchain layer 1 is having a DApp (decentralized applications) ecosystem. Examples of blockchain networks on layer 1 are Bitcoin, Ethereum, Cosmos, and Solana.

As mentioned earlier, every blockchain faces issues in the blockchain trilemma (decentralization, scalability, and security). One of the most common problems is scalability. Currently, blockchains usually have limitations on the number of transactions that can be processed at one time (TPS).

Various solutions are being developed to address this issue, such as sharding technology, innovations in consensus layer technology, and finally using layer 2 blockchain.

Layer 2

Layer 2 blockchain is created to solve problems that arise on layer 1. Layer 2 blockchain is built on top of the layer 1 network. The function of layer 2 is usually to address scalability issues. Layer 2 blockchain offers fast transaction processes and much lower transaction fees than layer 1. However, some layer 2 now bring various new technological innovations and have unique value propositions regardless of the underlying blockchain network.

One advantage of layer 2 blockchain is that it still inherits security from layer 1 above it. Therefore, it combines faster transaction processes and lower transaction fees but inherits security from layer 1. Examples of blockchain networks on layer 2 are Polygon, Arbitrum, Optimism, Loopring, and Aurora.

Layer 3

 Layer 3 is a special layer in blockchain infrastructure related to decentralized applications. The term layer 3 is still debated with different definitions. However, essentially layer 3 is the layer where crypto applications operate, whether on layer 1 or 2 blockchain (or even on their own blockchain). The function of layer 3 is to run all transaction activities occurring in the application. Examples of blockchain networks on layer 3 are UniSwap, AAVE, Curve, and STEPN.

The layer 3 application industry is dominated by the DeFi industry containing decentralized exchange (DEX) applications. Additionally, many new types of applications are emerging, such as Chiliz with its fan token ecosystem, STEPN as a pioneer in the move-to-earn (M2E) scheme, and the growing GameFi ecosystem.

Furthermore, there is a layer 3 trend where crypto applications start considering creating their own blockchain platform. This type of blockchain is usually called appchains (application-specific blockchains) because the network is specifically created to fulfill the application’s function. Examples of appchains are DeFi Kingdoms, dYdX, Osmosis, Acala, and Thorchain.

Buying Cryptocurrency on SafuBit

You can start investing in crypto assets easily and securely on SafuBit. Here’s a step-by-step guide on how to buy crypto using the SafuBit platform:

How to Buy Crypto on SafuBit

1️⃣ Create a SafuBit Account

• Sign up on SafuBit.com and complete the identity verification process to begin trading.

2️⃣ Deposit Funds

• On the homepage, click the Deposit button and add funds using your preferred payment method.

3️⃣ Search for Your Favorite Coin

• Open the Market page and look for the crypto asset you want to buy.

4️⃣ Buy Crypto

• Click Buy, enter the desired amount, and confirm your purchase.

✅ Now you own crypto assets!

---

Why Choose SafuBit?

✔ Secure & Regulated

• SafuBit ensures top-tier security and complies with global regulatory standards.

✔ Seamless Transactions

• The platform supports fast and easy crypto purchases with multiple payment options.

✔ Metamask & Web3 Integration

• SafuBit is compatible with popular digital wallets like Metamask, making transactions even more convenient.

✔ Learn & Stay Updated

• Explore educational content on SafuBit Academy, where you can access the latest insights on crypto and blockchain technology.

Learn more knowledge of crypto through various articles on Safubit Academy. All articles on Safubit Academy are created for educational and informational purposes only and are not intended as financial advice.

Don’t forget to follow our social media:
X : https://x.com/safubit
Medium : https://medium.com/@safubit.exchange