Introduction

Blockchain layers are the foundation upon which any blockchain protocol is built. So understanding how they work, what they comprise, and how they can be scaled is essential to everyone who makes use of protocols built on these layers, and it is nice to know even if one is not a user.

Prerequisite

To fully understand what will be discussed in this article, you should have a clear understanding of how Bitcoin and Ethereum work.

An Overview of Blockchain

Blockchains were born out of the need for systems that were free from centralized entities. Let's take a closer look at the term "Blockchain" to understand its underlining meaning: A block is a term used to refer to transactions carried out on a blockchain network. A Blockchain refers to all the blocks (transactions) chained together to create an immutable receipt that keeps track of all past and future transactions and can be accessed by anyone. Blockchains are a modern database technology that provides a transparent way of sharing and storing information.

Understanding how Blockchain Layers work

Blockchain layers are carefully designed technologies that work together for the scalability, security, decentralization, and immutability of the blockchain network. Each of the layers is designed for specific tasks, but all in all, the goal is to create a decentralized, secure system. For a blockchain to efficiently handle these three trifectas properly (i.e., scalability, security, and decentralization), it is not an easy task. A decentralized blockchain might not be scalable, while a scalable blockchain might not have the security it needs. A highly secure blockchain could be decentralized but not scalable. Bitcoin currently has the same dilemma: it is very decentralized and secure but has a very low throughput, making it hard to scale.

Types of Layers

We have six Blockchain layers, but the scope of this article will focus on Layers 1 and 2.

Layer 1: also known as the base layer, this layer not only validates transactions and permanently registers them in the network's database; it is also the foundation upon which all layer 2 solutions are built. Layer 1 is also responsible for the security and immutability of the network. However, this layer has scalability limitations, as it can handle only a certain amount of throughput (transactions). Some examples of layer 1 are:

• Bitcoin

• Ethereum.

Layer 2: The need for layer 2s became necessary with the low throughput and performance of the base layer. Layer 2 is a helper layer built on Layer 1 to increase its productivity and cost-effectiveness while benefiting from the base layer's security and decentralization. Layer 2 uses smart contracts to handle the processing of transactions; transactions are processed faster here, and final proofs are sent to the base layer when completed. Some examples of layer 2 are:

• Stacks

• lightning network

• liquid network

• RSK

Benefits of Layer 2

Scalability

Every network should be designed with the ability to scale in mind, and layer 2 is perfectly suited to handle it. Layer 2 helps handle more throughput, which leaves the base layer to take care of the security and decentralization of the network.

Low fees

Transactions completed on layer 2 are done at reduced transaction fees and great speed, which increases the scalability of the base layer.

Faster transaction time

Transactions get completed quickly here as they are processed off-chain (i.e., not on layer one) while still enjoying the benefits of the underlying layer and then finally settling on the base layer.

Improved security

By handling the processing of transactions on Layer 2, malicious attacks such as double-spending can be prevented on the base layer. Also, well-mapped-out, secure smart contracts can be used to execute safe and secure transactions.

Factors to consider when choosing a Layer 2 solution

Here are some important factors to look out for when choosing a layer 2 solution to transact with:

1. Security: It is highly recommended that layer two solutions maintain the same level of security and decentralization as the base layer it is built on.

2. Interoperability: Another key factor to consider is how well the layer 2 solution interacts with other protocols and tools within the base layer ecosystem.

3. Developer-Friendly: This applies to developers but is also essential. A layer two solution that provides support for developers looking to integrate their protocol into their dApps could include comprehensive documentation, resources, and essential tools to achieve their desired goal.

4. Track Record: It is important to carefully vet the Layer 2 network and make sure it has a track record of being secure and reliable. One of the ways this can be done is by researching the base layer it is built on and testing Layer 2 itself by running small transactions through it.

Conclusion

The need for Layer 2 solutions is apparent and has been a helpful innovation in the scaling of the base layer. Although the different solutions still come with certain limitations, their usefulness is without doubt needed as they provide scalability to the base layer while still benefiting from the security and decentralization of the base layer. The Layer 2 solutions listed above should be researched before being used.