Brief content

Layer 0 protocols are essentially the infrastructure on which Layer 1 blockchains can be built. As the base layer for blockchain networks and applications, Layer 0 protocols are part of many solutions to address challenges facing the industry, such as such as scalability and compatibility.

Introduction

What does the blockchain ecosystem consist of? One way to categorize the different parts of such an ecosystem is to categorize them into layers as if they were Internet protocols.

The blockchain ecosystem can be classified according to the following levels:

Layer 0: The base infrastructure upon which multiple Layer 1 blockchains can be built.

Tier 1: The underlying blockchains used by developers to build decentralized applications (dApps).

Layer 2: Scaling solutions that handle activities outside of Layer 1 blockchains to lighten their transactional load.

Layer 3: Blockchain applications, including games, wallets, and other dApps.

However, not all blockchain ecosystems fall into these categories. Some ecosystems may have no levels, while others may be classified as different levels depending on the context.

Layer 0 protocols help solve the problems faced by layer 1 networks built with a monolithic architecture, such as Ethereum. By creating a more flexible underlying infrastructure and allowing developers to run their own blockchains for specific purposes, Layer 0 aims to more effectively address issues such as scalability and interoperability.

What problems can level 0 solve?

Compatibility

Interoperability refers to the ability of blockchain networks to interact with each other. This property enables a more tightly interwoven network of blockchain-enabled products and services, which in turn provides a better user experience.

Blockchain networks built on the same layer 0 protocol can communicate with each other without the need for special bridges. Using various iterations of cross-chain transfer protocols, Layer 0 allows ecosystem blockchains to build features and use cases for each other. The results of this are increased transaction speed and efficiency.

Scalability

A monolithic blockchain such as Ethereum is often overloaded because a single layer 1 protocol provides all critical functions such as transaction execution, consensus, and data availability. This creates challenges for scalability, which Layer 0 can alleviate by delegating these critical functions to other blockchains.

This design ensures that blockchain networks built on the same layer 0 infrastructure can optimize certain tasks, thus increasing scalability. For example, execution chains can be optimized to handle a large number of transactions per second.

Flexibility for the developer

To encourage developers to use them, Layer 0 protocols often provide easy-to-use software development kits (SDKs) and a simple interface, ensuring that developers can easily run their own blockchains for specific purposes.

Layer 0 protocols give developers more flexibility in customizing their own blockchains, allowing them to define their own token issuance models and control the type of dApps they want to build on their blockchains.

How does layer 0 protocol work?

There are different methods of working with Layer 0 protocols. Each of them has its own design, features and focuses.

But generally, layer 0 protocols serve as the main and primary blockchain, backing up transaction data from different layer 1 chains. While there are clusters of layer 1 chains built on top of layer 0 protocols, there are also cross-chain transfer protocols that allow token and data transfers from different blockchains.

The structures and relationships of these three components may vary from one Layer 0 protocol to another. Here we will consider several examples:

Polkadot

Ethereum co-founder Gavin Wood designed Polkadot to allow developers to build their own blockchains. The protocol uses a main chain (mainchain) called Polkadot Relay Chain, and each independent blockchain built on Polkadot is known as a parallel chain or parachain.

Relay Chain functions as a bridge between parachains to ensure efficient data transfer. It uses sharding, a method of dividing blockchains or other types of databases, to make the transaction processing process more efficient.

Polkadot uses proof-of-stake (PoS) verification to ensure network security and consensus. Projects that want to use Polkadot participate in slot auctions. Polkadot's first parachain project was approved at an auction in December 2021.

Avalanche

Avalanche, launched in 2020 by Ava Labs with a focus on DeFi protocols, uses an infrastructure consisting of three main chains: Contract Chain (C-chain), Exchange Chain (X-chain) and Platform Chain (P-chain).

These three chains are configured specifically to perform essential functions in the ecosystem to improve security, maintain low latency and high throughput. X-Chain is used to create and trade assets, C-Chain to create smart contracts, and P-Chain to coordinate validators and subnets. Avalanche's flexible structure also enables fast and cheap cross-chain swaps.

Cosmos

Founded in 2014 by Ethan Buchman and Jay Kwon, the Cosmos network consists of a core PoS blockchain network called the Cosmos Hub and customized blockchains known as Zones. Cosmos Hub transfers assets and data between connected Zones and provides an overall level of security.

Each Zone is highly customizable, allowing developers to create their own cryptocurrency with their own block verification system and other features. All Cosmos applications and services hosted in these Zones interact via the Inter-Blockchain Communication (IBC) protocol. This allows assets and data to be freely exchanged through independent blockchains.

Results

Depending on how they are designed, Level 0 blockchains could potentially solve some of the industry's challenges, such as interoperability and scalability. However, it remains to be seen how successful the adoption of Level 0 blockchain will be. There are many competing solutions that aim to achieve similar goals.

How important level 0 blockchains will be in solving industry challenges will depend on their ability to attract developers to build these protocols, and whether the applications hosted on them provide real value to users.

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