Summary

Layer 0 protocols are essentially the infrastructure on which Layer 1 blockchains can be built. As the foundational layer for blockchain networks and applications, Layer 0 protocols are one of many solutions dedicated to addressing challenges facing the industry, such as scalability and interoperability.

Introduction

What does a blockchain ecosystem consist of? One way to divide the various components of the blockchain ecosystem is to think of it as an Internet protocol and categorize it by layers.

The blockchain ecosystem can be classified into the following levels:

Layer 0: The underlying infrastructure of multiple Layer 1 blockchains can be built.

Layer 1: The basic blockchain used by developers to build applications such as decentralized applications (DApps).

Layer 2: A scaling solution that handles Layer 1 blockchain activity to reduce its transaction load.

Layer 3: Blockchain-based application layer, including games, wallets, and other DApps.

However, not all blockchain ecosystems fall under this category. Depending on the context, some ecosystems will have certain layers missing, with the rest layered in different categories.

Layer 0 protocols help solve the challenges faced by Layer 1 networks built on a single infrastructure, such as the Ethereum network. Layer 0 is expected to more effectively solve issues such as scalability and interoperability by creating a more flexible infrastructure and allowing developers to launch their own dedicated blockchains.

What problems can Layer 0 solve?

Interoperability

Interoperability refers to the ability of blockchain networks to communicate with each other. With this attribute, a network of blockchain-enabled products and services can be more closely integrated to provide a better user experience.

By default, blockchain networks built in the same Layer 0 protocol can interact with each other without the need for specialized bridges. Layer 0 uses different iterations of cross-chain transfer protocols so that individual blockchains in a single ecosystem can build on each other's functionality and use cases. The general result of this is increased transaction speed and efficiency.

Scalability

A blockchain as large as Ethereum, with a single Layer 1 protocol providing all major functions such as transaction execution, consensus, and data availability, is often congested. This creates a scaling bottleneck that Layer 0 alleviates by delegating these major functions to different blockchains.

This design ensures that blockchain networks built on the same Layer 0 infrastructure can each optimize certain tasks, thereby improving scalability. For example, the execution chain can be optimized to increase the number of transactions processed per second.

Developer flexibility

In order to encourage developers to build on this foundation, Layer 0 protocols will provide easy-to-use software development kits (SDKs) and seamless interfaces to ensure that developers can easily launch their own dedicated blockchains.

The Layer 0 protocol provides developers with great flexibility to customize the blockchain. They can customize the token issuance model and decide the type of DApp they plan to build in the blockchain.

How does Layer 0 protocol work?

Layer 0 protocols operate in multiple ways. Each mode of operation differs in design, functionality and focus.

But generally speaking, the Layer 0 protocol serves as the main basic blockchain, capable of backing up the transaction data of various Layer 1 chains. With the Layer 1 chain cluster built on the Layer 0 protocol and the cross-chain transfer protocol, tokens and data can be transferred between different blockchains.

The structures and relationships of these three components in various Layer 0 protocols are quite different. Let’s look at a few examples:

Polkadot

Ethereum co-founder Gavin Wood designed Polkadot where developers can build their own blockchains. The protocol uses a main chain called the "Polkadot Relay Chain", while individual blockchains built on top of Polkadot are called "parachains."

The relay chain acts as a bridge between parachains to enable efficient communication of data. The relay chain uses sharding, a method of splitting a blockchain or other type of database, to improve transaction processing efficiency.

Polkadot uses Proof of Stake (PoS) verification to ensure network security and consensus. Projects to be built in Polkadot are required to participate in a slot bidding auction. Polkadot’s first parachain project was approved in the December 2021 auction.

Avalanche

Avalanche was launched in 2020 by Ava Labs and focuses on DeFi protocols. Avalanche adopts a triple blockchain infrastructure composed of three core chains: contract chain (C chain), transaction chain (X chain) and platform chain (P chain).

These three chains are specially configured to handle key functions in the ecosystem to enhance security, as well as reduce latency and increase throughput. The X chain is used to create and trade assets, the C chain is used to create smart contracts, and the P chain is used to coordinate validators and subnets. Due to its flexible structure, Avalanche can also achieve fast and low-cost cross-chain exchange.

Cosmos

Founded in 2014 by Ethan Buchman and Jae Kwon, the Cosmos Network consists of a proof-of-stake blockchain mainnet called the "Cosmos Hub" and customized blockchains called "partitions." The Cosmos hub can move assets and transmit data between interconnected partitions, providing a shared security barrier.

Each partition is highly customizable, allowing developers to design their own cryptocurrencies, customized block verification settings, and other features. All Cosmos applications and services hosted in a zone interact through the Inter-Chain Communication (IBC) protocol. This enables assets and data to be freely exchanged between independent blockchains.

Summarize

Based on the way it is designed, Layer 0 blockchain is expected to solve various challenges in the industry such as interoperability and scalability. However, it remains to be seen how far the popularity of Layer 0 blockchain can successfully go. There are many other solutions in the industry that aim to achieve similar goals.

How useful Layer 0 blockchains can be in solving industry challenges will depend on whether developers can be attracted to build within these protocols, and whether the applications hosted on the protocols can provide real value to users.

Further reading

  • What is Layer 1 in blockchain?

  • Blockchain Layer 1 and Layer 2 expansion solutions

  • What is the blockchain ternary paradox?