Recently, we have seen the cryptocurrency ecosystem thriving. New and innovative projects are constantly being developed that offer us security and innovative service delivery. Underpinning these projects has been blockchain infrastructure – constantly being refined to support secure, scalable and decentralized applications. The best examples of this type of ecosystem are Ethereum and Solana. However – that is not what we are talking about today. The topic of today’s lesson is layer 0, otherwise known as layer 0. What is layer 0, and how can it help Blockchain technology?
Blockchain layer architecture
Analysing the technology and layers of blockchain, it is easy to see that at times it can be complicated even for the advanced investor. In the cryptocurrency industry, we can find several ways to divide blockchain into layers. The most popular are:
The division into those that focus on analysing the architecture of the blockchain and the roles played by each of the layers.
And the second way, which is based on protocols. It distinguishes numerous layers of the blockchain, which differ from each other in terms of scalability, proposed solutions and interoperability. In this aspect, we also consider the problem of blockchain trilemma.
Now we’re going to take the subject a little more seriously, and before we move on to discuss Layer 0, we’ll break down the chain of blocks into factors. What, or rather, what layers does our chain consist of?
- Hardware. That is, the most basic one, in which we will find servers, relays, protocols, user computers – in a word, everything we need to create a functional Peer-to-Peer network.
- Data, which is responsible for managing all information, stored on the network. It includes all blocks, except, of course, the Genesis block. Any information stored in such a block is encrypted and immutable.
- Networks. This layer is responsible for communication solutions between nodes in the chain of blocks. This is where the transmission of data responsible for a given transaction and those necessary for the production of new blocks takes place. Its main task is to disseminate information while maintaining the privacy and security of user data.
- The consensus layer is the one responsible for validating (approving) transactions. To the consensus layer flows all the information from the network layer. This is also where their validation takes place. Recall: in order for any transaction to be considered valid by miners, all nodes must validate it, i.e. reach network consensus.
- Application, which handles smart contracts and dApps. It is the blockchain technology user interacts with.
What is layer 0?
Let’s move slowly to the substance. What is layer 0 of the blockchain network? It’s a type of protocol that allows developers to run multiple Layer 1 chain of blocks. These can be designed so that each serves a specific purpose and meets the needs of Layer 1 and/or Layer 2. Mainly the scalability trilemma (as opposed to Layer 3).
Layer 0 networks typically come with software development toolkits, or SDKs.
This allows developers to run their blockchains, known to us as tier 1 or sidechain, connected to the main tier 0 chain but operating independently.
Each Layer 0 has its own unique implementation and approach to running its blockchain. Examples of Layer 0 include Horizen, Cosmos and Polkadot.
Why do we require layer 0?
Because they solve three, important problems: scalability, flexibility and interoperability. At this point, it is essential to mention the so-called trilemma of blockchain technology that occurs in the blockchain ecosystem.
As defined, it is a series of trade-offs, between decentralization, scalability and security, that must be made when designing the blockchain and constructing rules to manage it in the chain and protocols.
Unfortunately, perfect decentralization cannot be achieved without losing scalability, and vice versa. This is particularly evident in the case of a monolithic blockchain, where transaction execution, consensus, and data availability are managed by a single network. This increases the likelihood of congestion and makes scaling very difficult.
To solve the scalability problem above, responsibility for these functions is delegated to independent blockchains. The main (executive) chain is then optimized and handles, for example, dApps with high TPS, while a second chain can develop for decentralization and serve as the final consensus layer for the executive chain.
Okay, but what about those 0 layers? They can help scale the blockchain. How? They increase transaction throughput. Transaction speed is usually measured in TPS (transactions per second), while transaction throughput looks at the total number of transactions a network can handle at the same time.
Example? Horizen – a Layer 0 protocol. A single blockchain running with the Blaze SDK can produce as many as 1,000 transactions per second.
What other features does layer zero have?
With the Layer 0 protocols SDK, you can compare the time and complexity of running a blockchain at Layer 0 to running a dApp at Layer 1. As a result, you can build and manage multiple L1s with really little effort.
Layer 0 also improves the interoperability of the ecosystem. Layer 0 networks use various cross-chain interactions to enable the transfer of assets. We wrote about the importance of interoperability in the blockchain and cryptocurrency ecosystem here.
How does layer 0 work?
At layer zero, we distinguish three, main “components” of the protocol:
- The main chain, which usually serves as the main blockchain. It is where transactional data from the various tier-1 chains is supported.
- Sidechains. These are independent tier-1 blockchains. They have their set of validation nodes and can easily run the own consensus mechanism.
- Cross-chain transfer protocol. This is a mechanism that allows the transfer of tokens and other forms of data between chains.
Summary
So, you can see how necessary “for the life” of a given ecosystem are layers. Scalability, interoperability, and decentralization – there is still a long way to go for blockchain technology to reach full consensus on these issues. However, new solutions are constantly being proposed to improve the performance of blockchain technology.