Layer 2
- Extra processing power is needed to increase the productivity of the blockchain. The network becomes congested as a result of the need for additional nodes, though. Although adding nodes is necessary to maintain a blockchain’s decentralized nature, adjusting scalability, decentralization, or throughput will have an impact on the other layer 1 factors.
- Because of this, layer 1 cannot be made larger without moving all processing to layer 2, a layer that is added on top of layer 1. By allowing the integration of layer 1 solutions from third parties, this is made possible.
- Redesigning Layer-1 and overseeing all transactional validations is a new network called Layer-2. In the blockchain ecosystem, Layer 2 is positioned on top of Layer 1 and communicates with it continuously. The management of new blocks’ addition to the blockchain, however, is the sole responsibility of Layer-1.
- Think of a layer 2 blockchain that has been implemented on the Bitcoin blockchain, such as the Lightning Network.
4. Layer 3
- The final layer of the blockchain ecosystem is also the one that can be seen with the naked eye. Participants will eventually communicate with user interfaces on Layer 3 of the protocol. This layer seeks to offer simplicity and ease when working with L1 and L2.
- L3 not only offers user interfaces (UI), but also functions such as intra- and inter-chain operability, such as decentralized exchanges, liquidity provisioning, and staking applications. Blockchain technology can be used in real-world settings thanks to decentralized apps (dApps), a kind of layer 3 interfaces.
- Other examples include Decentralized cryptocurrency exchanges like Uniswap and Pancake Swap, Like Binance and Coinbase, wallet providers, and Compound and Aave-style liquidity management protocols.
Layered Architecture of Blockchain Ecosystem
Blockchain has been hailed as the most revolutionary in the past ten years. Most likely to be impacted are the financial markets. Healthcare, pharmaceuticals, insurance, smart properties, automobiles, and even governments are just a few of the industries that are incorporating technology. However, Bitcoin – A Peer-to-Peer Electronic Cash System, which is also the initial application of blockchain technology, is the implementation of the technology that has been most successful so far. So, it makes sense that the easiest way to grasp blockchain technology is to first comprehend how the Bitcoin System was created and put into use.
An ever-expanding digital list of data entries is what a blockchain is, to put it simply. This type of list is made up of numerous data blocks that are linked together and secured using cryptographic proofs in the order that they are stored. The article focuses on discussing the layered architecture of the blockchain ecosystem.
The following topics will be discussed here:
- What Is Blockchain?
- Components of Blockchain Technology
- Different Layers of Blockchain.
- Types of Blockchain Layers Based on Professionals.
- What Are Layer 2 Solutions?
- Ethereum Blockchain Laye
- What Is The Blockchain Security Layer?
- Layer 1 vs Layer 2 Blockchain.
- Best Layer 1 Crypto
- Best Layer 2 Crypto
- Best Layer 3 Crypto
- Best Layer 4 Crypto
Let’s start discussing each of these topics in detail.