Blockchain Layers (0, 1, 2, 3...) Explained for Newbies, With Simple Analogy

[Crypto Library]

Why I created this topic: There was confusion about Blockchain Layers as usual but I did not find any topic where discussed all the layers in one place and that was beginner-friendly, so I am trying to make it easy for beginners to understand the blockchain layers in one topic.

Introduction of Layer:
To know L1, L2, L3 etc of the block chain, we first need to know what is meant by Layer?
-In simple terms, a block-chain layer is a blockchain system where each layer is named based on a specific task.
For example, the components of a complete building are-
"Foundation Main, Structure Electric System / Water System Elevator /, Stairs Rooms (gym, office, restaurant) Electrical wiring, plumbing, water supply, Light switch, water tap etc" And each of them has a specific purpose to fulfill.
Now if I compare these with the layers of a block chain then-

|Apartment Building |	|Blockchain Layer|	|Example in Coin/Blockchain|
Foundation	Layer 0	Cosmos-Polkadot-type blockchain infrastructure/, internet, hardware,
Main Structure	Layer 1	Bitcoin, Ethereum, Solana
Elevator / Staircase	Layer 2	Lightning Network, Arbitrum, Optimism, Base
Rooms (Gym, Office, Restaurant)	Layer 3	Application-specific networks / app-specific chains
Electrical Wiring, Plumbing, Water Supply	Layer 4	Smart-contract / application infrastructure such as Cosmos SDK modules or application frameworks
Light Switch, Water Tap	Layer 5	Wallets and user-facing dApp interfaces

Laye-0
 Even though we might get an idea from the already mentioned example, in simple terms, we can say that Layer-0 is a coordinator that acts as an infrastructure for creating multiple blockchains.
This means it is a foundation that helps in later creating Layer-1 or scaling it.

Layer-1
 Layer-1 is the direct foundation of a blockchain network where the rules, starting from the programming language, block duration, consensus procedures, and more are determined. Example- Bitcoin, Ethereum, Solana
more details

Layer-2
 Layer-2 is a solution to some problems based on Layer 1, which basically works like an Elevator in a building. For example, we find solutions to the complexities that Bitcoin and Ethereum networks often face in Layer-2.
like Lightning network use for lower tx fee and fast transaction for bitcoin and Arbitrum from Ethereum.

Layer-3
 As a definition of Layer-3, we can assume that it is a special layer created for a specific use case, which is based on Layer-2.
For example- Xai(L3) ​​ based on Arbitrum(L2)  , whose main tasks are on the gaming-focused blockchain.

Layer-4
 We cannot properly call it a standard architectural layer (L0-L3), but by definition "it is an application layer that includes the smart contracts, the dapps or the decentralized applications, and all the software that runs on the Blockchain network."

Layer-5
 This is also not a standard architectural layer (L0-L3), but to explain it simply, Layer-5 is the part of the blockchain that the user directly faces.
Like- the wallets and Dapp Interfaces.


source- https://shardeum.org/blog/what-are-blockchain-layers/ & Chatgpt used to generate the table



"N.B.- If there are any mistakes in my writing or if there is any need for enhancement, all your suggestions are welcome."

[OcTradism]

Honestly with massive failures of layer-2 blockchain projects on Ethereum ERC-20 chain, it's unrealistic at least at the present and near future that further layers like 3 - 5 projects will be able to survive in this industry.

Layer-2 projects on ERC-20 chain made a lot of hype three years ago but things changed after transaction fees on ERC-20 chain (layer 1) became very cheap, and much cheaper than before. This considerable cheaper transaction fees on ERC-20 are like bitter pill against Ethereum layer-2 projects.

If Layer-2 projects already faced with massive challenge like this, lower layers will have more challenges and unlikely they will survive because needs to use such lower layers for transactions will become much smaller or zero.

With Bitcoin layer-2
Sidechain Observer - Bitcoin L2 Projects & current state of development.
Bitcoin layer 2 resources.

[dkbit98]

We had so many exploits and hacks on second layers and bridges, including latest Liquid Network big hack, that I am strongly against ALL second layers.
I don't care about altcoin layers and they are mostly dying off, but I am against all bitcoin layers, including lightning network, sooner or later they are going to be exploited.
 

[Rashlyowl]

I have been in the crypto space for over a year, yet the only things I know about are Layer 0, Layer 1 & Layer 2. I immediately asked ChatGPT about this & it turns out that the common layers in crypto only go up to Layer 3. Meanwhile, if we want to go to more distant layers, it is actually not limited to just Layer 5, it could extend to Layer 7 & even higher.

In my opinion, examples like Layers which aren't common in crypto shouldn't be explained, doing so might just confuse newcomers.

[7juju]

I have been in the crypto space for over a year, yet the only things I know about are Layer 0, Layer 1 & Layer 2. I immediately asked ChatGPT about this & it turns out that the common layers in crypto only go up to Layer 3. Meanwhile, if we want to go to more distant layers, it is actually not limited to just Layer 5, it could extend to Layer 7 & even higher.

In my opinion, examples like Layers which aren't common in crypto shouldn't be explained, doing so might just confuse newcomers.

If I’m being honest with myself, I have only known about layer 0,1 and 2. Because since I joined crypto community they have been the most mentioned in everyday conversations that I have come across likewise. If not for this post I didn’t know there was up to layer 5, and you even say it could get to layer 7. Well we learn everyday and I have just learnt something new today. This is the power of the forum.

[Rashlyowl]

If I’m being honest with myself, I have only known about layer 0,1 and 2. Because since I joined crypto community they have been the most mentioned in everyday conversations that I have come across likewise. If not for this post I didn’t know there was up to layer 5, and you even say it could get to layer 7. Well we learn everyday and I have just learnt something new today. This is the power of the forum.

I mentioned Layer 7 merely as an example, because in reality, these layers can be further expanded, they are not limited to just that point. Regarding industry discussions, you are right that the common topics are Layer 1 (such as BTC, ETH, XMR, SOL) & Layer 2 as a scaling solution for Layer 1, like the Lightning Network.

[Decimation]

Then what does it mean that the process of layers increases periodically and will the number of layers continue to increase periodically?

[Ambatman]

I have been in the crypto space for over a year, yet the only things I know about are Layer 0, Layer 1 & Layer 2. I immediately asked ChatGPT about this & it turns out that the common layers in crypto only go up to Layer 3. Meanwhile, if we want to go to more distant layers, it is actually not limited to just Layer 5, it could extend to Layer 7 & even higher.

In my opinion, examples like Layers which aren't common in crypto shouldn't be explained, doing so might just confuse newcomers.

Well The issue is the higher the layer the more complex it gets
Since most times they are created to bring about More feature or functionality in  prior layer
And Complexity most times brings about more bugs and attack vector
The layer security is reliant on one under but with more risk added from additional feature.
Hence why successful layer two are limited and gets lower as the layer increses.

[d5000]

For me, layers 4 and 5 do not make any sense in this classification. They're probably simply marketing terms from altcoins desperately trying to sell some "innovation".

If there was really a Layer 4, it would have to run on top of an "app-chain" (layer 3). Otherwise, it would be simply another layer-3. But such an app-chain is already so specific, that I don't think any layer-4 runs on a layer-3. I don't think there is a scaling need for layers 4 and 5.

And if these "layers" are really only "the software" and "the interface", what is the Bitcoin Core software / interface then? A layer-4/5 without any layer-2 and layer-3?

No, for me in this classification there's a confusion between architectural layers and terms coming from the OSI Layer vocabulary.

Layer 0 is already a bit an "established term" in the altcoin world, but in my opinion it's simply another word for a layer 1 specially optimized for sidechains. While Google's AI says there are differences between Cosmos' "zones" and "traditional sidechains", like the independent consensus, I don't agree -- many Bitcoin "sidechains" operate exactly like Cosmos "zones" with an independent consensus algorithm (for example, Stacks and RSK). Merge-mined sidechains are only one of many types.

Until Layer 3 however, the structure makes somewhat sense.


I think the following layer architecture for Bitcoin would be ideal to scale to billions of users:

Layer 1: Bitcoin main-chain

Layer 2: Sidechains (e.g. Drivechain model, BitVM ...) / Lightning (as direct BTC layer) / Ark

Layer 3: Lightning on Sidechains. This would make somewhat sense: Sidechains have a big but limited capacity, but with Lightning the capacity would become almost infinite. This layer-3 could even be connected with the "Layer 2 Lightning" via atomic swap nodes.