What Is Layer 0 in Blockchain? Layer 0 vs Layer 1 vs Layer 2, Explained

Layer 0 is the base network that other blockchains are built on and connect through. Think of it as the shared plumbing underneath: it can provide security, consensus and messaging, so separate chains can run side by side and swap data and value. Layer 1 is a blockchain itself, such as Bitcoin or Ethereum. Layer 2 is built on top of a Layer 1 to make it faster or cheaper.

If you have spent time in crypto, you have heard people argue about layers: "Don't use the Layer 1, use the Layer 2, it's cheaper." It gets confusing fast. This post explains each layer in plain terms, why each one exists, and what makes a network a real Layer 0.

We start with Layer 1, because the first blockchains, Bitcoin and Ethereum, are Layer 1s. Once that is clear, Layer 0 makes a lot more sense.

Blockchain technology is inherently complex. It involves advanced concepts in computer science, cryptography, and network theory. For someone not deeply versed in these areas, the technical details can be overwhelming.

Just like the internet, which most people use daily without understanding the underlying protocols and infrastructure, blockchain technology is also a sophisticated system that can be challenging to grasp in its entirety.

That's why we're choosing to use something with which most people are familiar to make understanding the different layers easier, namely, building a house.

This familiarity provides a common ground to explain something unfamiliar. By comparing blockchain layers to the process of building a house, a complex and technical subject is translated into a more relatable and understandable narrative.

Layer 1 refers to the base level of a blockchain network. If you’ve used Bitcoin or Ethereum you’re already familiar with a Layer 1. This is the foundational layer where the blockchain itself operates.

The layer 1 includes the entire infrastructure of a blockchain, like:

• the ledger that records all transactions
• the consensus mechanism (like Proof of Work or Proof of Stake) that validates and secures transactions
• and the native cryptocurrency (like Bitcoin or Ether).

Now imagine a Layer 1 as the foundation and basic structure of a house. This includes the concrete foundation, walls, roof, and basic plumbing and electrical systems.

In blockchain terms, Layer 1 is the base protocol (like Bitcoin or Ethereum), which defines the basic rules for the network, including how transactions are processed and recorded on the blockchain. It's the core infrastructure that supports everything else.

However, just like a basic house structure might lack certain features for comfortable living, Layer 1 blockchains often have limitations, particularly in scalability and processing speed. They provide the essential elements but might not be sufficient for all needs, especially as the number of users grows.

We’ve already talked about the limitations of blockchains in a previous post. Feel free to read that if interested in learning more. For now, let’s jump to the next layer. Layer 2’s!

Layer 2 is a secondary framework or protocol that is built on top of a Layer 1 blockchain to enhance its scalability and efficiency. These solutions are designed to handle transactions off the main chain (Layer 1), thereby reducing the burden and congestion on the base layer. This is achieved through various mechanisms like

• state channels,
• sidechains, or
• rollups.

Layer 2 is like adding extensions and additional features to the house to make it more livable and efficient without altering the basic structure. This could include adding a second floor, installing advanced heating and cooling systems, or building an extension for more living space.

In blockchain, Layer 2 solutions (like Lightning Network for Bitcoin or rollups for Ethereum) are built on top of the Layer 1 blockchain. They address the limitations of Layer 1, particularly scalability and transaction speed, by processing transactions off the main chain or using other methods to increase efficiency.

Layer 2 solutions are necessary when the Layer 1 blockchain (the basic house structure) doesn't have all the necessary components for efficient and scalable operation, just as you might need to add features to a basic house to make it more comfortable and functional.

While Layer 2 solutions offer some benefits in terms of scalability and efficiency for blockchain networks, they also come with certain trade-offs, particularly concerning security, decentralization and complexity for user experience.

It's important for you as a user or developers to be aware of these trade-offs when choosing to use or build on Layer 2 solutions. Layer 0 tackles these problems one level lower, in the infrastructure that chains are built on. Let’s go all the way down to Layer 0.

Let’s start with the most obvious question: what is a layer 0 blockchain?

Layer 0 in blockchain refers to the underlying infrastructure that supports various Layer 1 blockchains. It's a foundational network that provides the basic tools and protocols needed for different blockchains to operate and interact with each other.

A few real examples make this concrete. Polkadot's relay chain secures the chains that connect to it. Cosmos links independent chains through its Inter-Blockchain Communication (IBC) protocol. Avalanche lets teams launch their own chains, now called Avalanche L1s (they were called subnets until the Etna upgrade in December 2024).

Before we continue with the house analogy we think it’s important to establish the criteria for a Layer 0 network. We’ve noticed over the years that there are networks calling themselves a Layer 0 network, which we would not classify as one.

While there isn't a universally agreed-upon set of criteria for what constitutes a Layer 0 network, several key characteristics are commonly associated with this term:

1. Interoperability

Cross-Chain Communication: Layer 0 networks facilitate communication and interaction between different blockchain networks, enabling them to share data and value seamlessly.

Protocol Agnosticism: They are often designed to support multiple blockchain protocols, not limited to a single type of Layer 1 or Layer 2 network.

Why this matters: think of each blockchain as a phone brand whose apps only run on that brand. Interoperability is what lets an app, a token or a piece of data move between them. Without it, users and developers have to pick one chain and accept its limits. Layer 0 projects take different routes to the same goal:

• Cross-chain protocols, such as Quant Network's Overledger, connect existing chains so they can pass data and transactions to each other.
• Wrapped tokens represent an asset from one chain on another. Wrapped bitcoin (wBTC) lets bitcoin be used in Ethereum apps; Flare Network's F-assets do the same for assets like BTC and XRP on Flare.
• Interoperability-first networks such as Constellation are built to validate and move data between chains, apps and devices from the start.

2. Scalability

Network Support: Layer 0 provides the infrastructure that allows multiple blockchain networks to scale effectively, handling a large number of transactions and diverse use cases.

Resource Allocation: Efficient distribution and utilization of resources across different networks to optimize performance and scalability.

3. Decentralization

Decentralized Framework: Maintains the principle of decentralization, ensuring that no single entity has control over the entire network.

Validator Diversity: Supports a diverse and distributed set of validators or nodes across different blockchain networks.

4. Security

Shared Security Models: Offers mechanisms that enhance the security of interconnected blockchain networks.

Robust Consensus Mechanisms: Implements strong consensus algorithms to secure the network and validate transactions.

5. Flexibility and Modularity

Modular Design: Layer 0 networks often have a modular structure, allowing for the easy addition or modification of features without impacting the entire system.

Customizability: Enables different blockchain networks to customize their protocols and features while still being part of the Layer 0 ecosystem.

6. Infrastructure Services

Common Services: Provides essential services like consensus, messaging, and data storage that can be used by various blockchain networks.

Plug-and-Play Components: Offers components that can be easily integrated into different blockchain networks to enhance their capabilities.

7. Governance

Governance Mechanisms: Includes mechanisms for governance that allow for network upgrades, dispute resolution, and decision-making processes that involve multiple stakeholders.

8. Tokenomics

Economic Incentives: Layer 0 may have its own tokenomics model to incentivize network participation, security, and collaboration among different blockchain networks.

Layer 0 networks are essentially the "network of networks" in the blockchain ecosystem, providing the foundational infrastructure and services that enable various blockchain platforms to operate cohesively, securely, and efficiently.

One naming trap: LayerZero is not a Layer 0 blockchain. It is a cross-chain messaging protocol that lets smart contracts on different chains talk to each other. Useful, but a different thing.

Several networks describe themselves as layer 0, Polkadot, Cosmos and Avalanche among them. The one we’ve researched most deeply is Constellation: check out our blog about Constellation $DAG to see how it approaches these criteria.

We know this was probably a bit difficult to understand but we hope the following house analogy can clear up the confusion.

Layer 0 solves problems at a core level by providing a universal framework upon which various Layer 1 blockchains can be built and interact. It's like ensuring that the housing development has all the necessary infrastructure so that each house (Layer 1) can be built efficiently and can easily access essential services.

Layer 0 enables different blockchain networks to work together seamlessly, just as a well-planned infrastructure allows different houses in a neighborhood to efficiently access shared resources and services.

In summary, Layer 1 is the basic structure of the house, Layer 2 adds necessary features and extensions for better functionality, and Layer 0 provides the fundamental infrastructure for the entire housing development, ensuring that everything works together harmoniously.