Blockchain knowledge: What is the difference between layer 1/2/3/parachain/side chain?

How much do you know about the differences between layers 1, 2, and 3, parachains, and side chains? The emergence of various blockchain scaling solutions has sparked discussions about the differences and roles of Layer 1, Layer 2, Layer 3, parachains, and sidechains in the evolving crypto ecosystem.

Understanding these concepts is crucial for developers, investors, and users to navigate the complex landscape of blockchain technology—but it’s not always clear which is which and why we need so many different ones. type.

Today, the editor of this site will give you a detailed introduction to the differences between layers 1, 2, and 3, parachains, and side chains. Friends who like it, please take a look!

Introduction to the differences between layers 1, 2, and 3, parachains, and side chains

Layer 1 blockchain, such as Bitcoin BTC, Ethereum , BNB Chain and Solana, form the infrastructure of the blockchain network. These base layer protocols handle the execution, data availability, and consensus aspects of the network, allowing transactions to be verified and completed without relying on another network. Each layer 1 blockchain has its own native token that is used to pay transaction fees.

However, scaling a Layer 1 network is a significant challenge and often requires changes to the core protocol, such as increasing block sizes, adopting new consensus mechanisms, or implementing sharding technology.

To address the scalability limitations of Layer 1 blockchains, Layer 2 solutions have emerged as secondary frameworks built on top of existing networks. Layer 2 protocols offload some of the transaction requirements from the main chain to adjacent system architecture, processing off-chain transactions and recording the final state only on the Layer 1 blockchain.

Examples of layer 2 scaling solutions include the Bitcoin BTC Lightning Network, Ethereum Plasma Chain, Optimistic Rollups, ZK-Rollups, sidechains, and state channels. These protocols (mostly) inherit the security of the underlying layer 1 blockchain while increasing scalability, speed, and cost.

The search for optimal scaling solutions for Tier 1 is far from static. For example, the Ethereum Foundation moved entirely away from Plasma solutions in favor of scaling, stating,

“While Plasma was once considered a useful scaling solution for Ethereum, it was later abandoned in favor of Layer 2 (L2) Scaling Protocol. The L2 scaling solution solves several of Plasma’s problems. One of Ethereum’s subsequent L2 solutions is sharding, which is now “rollups” on the Ethereum roadmap. and Danksharding". After Dencun, this evolution continued to escalate, scaling through Layer 2 on top of Layer 2 (often referred to as Layer 3 chains).

Layer 3 blockchains are application-specific chains based on Layer 2 networks that enable further scalability, customization, and interoperability. For example, Arbitrum Orbit allows developers to create a layer 3 chain, called the “Orbit Chain”, which is based on Arbitrum’s layer 2 chains, Arbitrum One and Arbitrum Nova. These Orbit chains can be configured with custom gas tokens, throughput, privacy and governance, and projects such as XAI, Cometh and Deri Protocol are already being built on Arbitrum Orbit.

Similarly, Optimism’s OP Stack powers a layer 3 blockchain “hyperchain” that shares security and communication layers, and Coinbase’s Base is a well-known layer 3 chain on the OP Stack. The OP stack is designed to make layer 3 chains interoperable. Other Layer 3 solutions include zkSync’s Hyperlinks and Polygon’s Supernets. Key benefits of Layer 3 include hyperscalability through recursive proofs and compression, customization of gas tokens, throughput, privacy and governance, interoperability between Layer 3 chains and with Layer 1/2, As well as low cost and high performance.

Another solution outside of the EVM ecosystem is parachains. Parachains are a key component of the Polkadot and Kusama networks, and are application-specific independent blockchains that run in parallel within these ecosystems. Parachains connect to the main relay chain, renting out its security while maintaining their own governance, tokens, and functionality. These chains can seamlessly process transactions and exchange data with each other using cross-chain communication protocols such as XCMP. Collector nodes maintain the entire state of the parachain and provide proofs to relay chain validators.

Sidechains, another scaling solution, are independent blockchains that run parallel to the main chain, with tokens and other digital assets moving between them via a two-way peg. The side chain has its own consensus mechanism and block parameters, making it more flexible and scalable than the main chain. They are considered a type of layer 2 solution because they relieve some of the transaction burden from the main chain. Examples of sidechains include Bitcoin’s Liquid and Ethereum’s Polygon PoS. The key difference is that chains like Polygon PoS have their own security and validator sets, rather than relying on Layer 1 to secure the network.

Understanding the roles and differences between Layer 1, Layer 2, Layer 3, Parachains and Sidechains can be complex. These technologies all play a vital role in solving the scalability, interoperability, and customization challenges of blockchain networks. By leveraging these solutions, developers can create more efficient, user-friendly, and interoperable decentralized applications, ultimately driving adoption and growth of the digital asset ecosystem.

There are many more use cases, benefits and reasons why there are so many different types of scaling solutions - each with their own pros and cons. Hopefully this overview helps break down some of the initial complexities, allowing you to explore the chains that appeal to you most.

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