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Jonas Simanavicius

L0s, L1s and L2s: What Are They And Why Do We Need Them?

May 4, 2023

So you’ve heard about the different layers of blockchains: Bitcoin, Ethereum, Solana, and other popular chains are all Layer 1 (L1) protocols; Optimism, StarkNet, and Arbitrum are some of the most well-known Layer 2s (L2s), but what about Layer 0s (L0s)? What do they do? What do all three layers do, and why do we need them within a complex technology? To understand one layer, you need to understand them all.

Think of it like this: Blockchains are less of a three-layer cake and more of an interconnected forest of layered trees — L0s are the root systems below the surface, supporting from the ground up; L1s are the mighty trunks, the main bodies of the trees where all the nutrients travel through; and L2s are the canopies of leaves that stretch out from the top, helping the trees scale in size and covering more space than the trunk could on its own.

In this article, we’ll break down the functions of each layer in detail, and you’ll walk away with an understanding of how these layers function with one another.

The Beginning: Layer 0

Layer 0 (L0) blockchains are the foundational layer of many blockchain networks. They aim to help solve some of the problems that Layer 1 chains consistently run into — namely scalability, interoperability, and flexibility for developers. Two well-known examples of Layer 0 blockchains out there right now are Polkadot and Cosmos.

In blockchain development, interoperability is one of the main challenges — and also areas of opportunity – for growth. Many blockchains cannot communicate with one another because they’re built on different foundations and lack native tools that would allow them to connect and cooperate with other chains and external APIs. L0s directly address this problem by providing a common base for L1s to be built on top of, allowing cross-chain transactions and data exchange, and fostering a more interconnected network of blockchain-enabled services.

L0s also assist with scalability by enabling developers to increase transaction throughput. By building multiple L1 sidechains, they can divide transaction processing work between those multiple chains, significantly increasing processing power. For example, if a single L1 blockchain can handle 5,000 transactions per second, but you can build 100 sidechains with the same capacity, you can process 500,000 transactions per second.

An important point to bear in mind: the term “layer 0” does not always refer to a blockchain. Although it’s generally used to refer to blockchain networks like Cosmos and Polkadot, “layer 0” can also refer to foundational elements of blockchain such as the hardware, connections, miners, and other components that layer 1s operate on.

But whether one or the other, their role is the same: to empower blockchains to communicate, cooperate, and scale more efficiently, positively impacting not only that isolated blockchain itself but the entire ecosystem.

Moving up: Layer 1

Layer 1 (L1) blockchains are the networks built on top of L0 protocols, and they play by the protocol-level “rules” that their L0s set. L1s comprise all the nodes that participate in a network, and each of those nodes contains a copy of the entire blockchain ledger. This level is where most transaction processing and block creation occur.

These blockchains utilize consensus algorithms, such as Proof of Work (PoW) and Proof of Stake (PoS), to maintain network security, verify transactions, and reach consensus between nodes. These mechanisms ensure that the network remains decentralized and resistant to malicious activities.

L1s are also where smart contracts are deployed and executed. Smart contracts are self-executing agreements that enable trustless and automated transactions between parties, eliminating the need for intermediaries.

And if L0 protocols are the bedrock on which L1s are built, then L1 chains are the foundation on which Decentralized Apps (dApps) are deployed on. DApps like Uniswap (built on Ethereum) and marketplaces like NBA TopShots (built on Flow) leverage the decentralized, secure, and transparent nature of L1 blockchains to offer services like finance, gaming, supply chain management, and more.

Overall, L1 blockchains provide essential functions, including consensus mechanisms, transaction processing, data storage, and security features, to enable the development of various services like dApps and smart contracts. These L1s must be built on top of strong, secure, and reliable foundations, or else they’ll be vulnerable to attacks and unable to perform their basic functions.

Scaling Beyond: Layer 2

Layer 2 (L2) blockchains are also known as scaling solutions, and (not surprisingly) they’re built on top of L1s. Why do blockchains need scaling solutions, you ask? An excellent question, worthy of a list in response:

  1. Limited block size and transaction throughput
  2. High computational requirements
  3. Too much network traffic

Every L1 blockchain suffers from most, if not all, of these issues, and L2 solutions are designed to address each.

Instead of sidechains built next to the initial L1, these L2 blockchains typically use technology like Zero-Knowledge Proofs (ZKPs) to enable off-chain scalability, where some of the L1’s processing load is taken off of the main blockchain and moved onto a secondary network or protocol. The result of the transaction process is then carried back to the L1. This allows for faster and cheaper transactions, larger capacity for network traffic, and increased throughput, all while maintaining security and decentralization.

Example: the Cosmos Ecosystem

Let's go through a well-known example to illustrate how all three layers would co-exist: the Cosmos ecosystem. Beginning with layer 0, we have the Cosmos blockchain itself. Cosmos leverages the Inter-Blockchain Communication (IBC) protocol to enable seamless communication between different blockchains. The Cosmos Network consists of multiple blockchains, known as "zones," each running on its own consensus algorithm and offering specific functionality. The central hub of the network is the Cosmos Hub, which connects these zones and manages the communication between them. The native token of the Cosmos ecosystem is ATOM, which is used for staking, governance, and paying transaction fees.

Then, we have a layer 1: Osmosis, the Cosmos ecosystem’s largest decentralized exchange (DEX) and automated market maker (AMM). Osmosis enables users to swap tokens and contribute to liquidity pools. It utilizes the IBC protocol to facilitate cross-chain token swaps and transfers.

To break down the relationship between the two: Cosmos provides the underlying infrastructure and interoperability layer for layer 1 blockchains like Osmosis, allowing those L1s to utilize the Cosmos ecosystem's features like Tendermint consensus, the IBC protocol, and Cosmos SDK (software development kit). This relationship also enables Osmosis to easily communicate with other blockchains in the Cosmos ecosystem and allows users to seamlessly swap tokens across different chains.

To find examples of layer 2 blockchains, we’ll have to look at another ecosystem — Ethereum, which has various Layer 2 scaling solutions like Polygon and Arbitrum that address the scalability issues mentioned in the above section. These Layer 2 chains are built on top of the Ethereum Layer 1 blockchain and are designed to improve the network's throughput and reduce transaction fees by handling transactions off-chain and reporting back with the results to the Ethereum network.

Syntropy’s Role as a Layer 0

Now, where does Syntropy fit in all of this?

Syntropy itself is a L0 technology — but instead of just connecting L1 chains, we connect users, servers, and devices across the world, both in Web2 and Web3, to the Internet through optimized, decentralized data routing and bandwidth sharing. Although Web2 and Web3 have myriad differences, one thing holds true across both movements: they rely on the Internet, and without connectivity, they’re rendered relatively powerless.

In Web3 specifically, Syntropy can offer L1 blockchains access to an upgraded and decentralized version of the Internet today – a critical part of the infrastructure that is often overlooked and thought to be decentralized, but that in reality is not. Syntropy is changing that.

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About Syntropy:

Syntropy delivers scalable, ultra-fast on-chain data for Web3 across DeFi trading protocols, projects, and ventures. Syntropy revolutionizes access to real-time blockchain data, providing on-demand, low-latency streams of transactional data directly from the mempool. Syntropy works on a decentralized architecture, enabling trust free, oracle-grade access to Web3 data.

To learn more about Syntropy, visit the Syntropy website, Twitter, Telegram, Discord or blog.