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Introduction to Layer 0 Protocol: The foundation of Blockchain

Layer 0 constitutes the backbone of a blockchain network that enables the operation and communication of subsequent layers. This layer includes all the fundamental protocols, consensus mechanisms and data structures of an entire network. Unlike Layer 1 and Layer 2, which primarily focus on specific functionalities such as the deployment of smart contracts (Layer 1) and scaling solutions (Layer 2), Layer 0 emphasised the designing of the core architecture and protocols for the network. 

How does Layer 0 protocol work?

Layer 0 protocols operate in several different ways. However, most of the Layer 0 protocols adopt the relay (or sidechain-based) infrastructure. The infrastructure includes three main components: 

  1. Mainchain: A mainchain acts as the primary blockchain within a Layer 0 network. The mainchain supports the data transfer between multiple Layer 1s (L1) connected to the mainchain. 
  2. Sidechains: Sidechains are application-specific L1s connected to the mainchain. These are all independent protocols with their own set of validator nodes and consensus mechanisms. 
  3. Cross-chain transfer protocol/interchain communication protocol: This protocol acts as a mechanism that enables tokens and data to be transferred trustlessly and securely among L1s. This allows value and information to pass the Layer 0 network, supporting interoperable application 

Key Features of Layer 0 protocol

Layer 0 complements the three significant blockchain pillars of scalability, security, and interoperability. Key qualities of Layer 0 include: 

Scalability

Scalability is one component of the trilemma faced by early blockchain platforms such as Bitcoin and Ethereum. As transaction volumes increase, these networks grapple with handling the load, resulting in a long time process, network congestion, and high transaction fees.  Layer 0 protocol aims to tackle this problem with novel solutions, such as the sharding technique. Sharding is a technique in which the network is divided into smaller, more manageable parts, enabling the parallel processing of transactions, therefore significantly increasing the network’s throughput. 

Interoperability

Thanks to Layer 0 protocols like cross-chain bridges and interoperability frameworks, the exchange of information and assets across disparate blockchain platforms is streamlined. This interoperability has opened up the world of cross-chain applications, decentralised finance (DeFi), and supply chain management.  

Security and Consensus Mechanisms 

By designing robust consensus mechanisms, Layer 0 protocols create a trustless environment where users can transact and interact without the need for intermediaries. Consensus mechanisms (e.g., Proof-of-Stake (POS) or Proof-of-Work (PoW)), leverage the financial incentives to secure the blockchain and prevent/minimise malicious attempts. 

Additionally, Layer 0 employs a range of advanced cryptographic techniques (i.e., the encryption and decryption of information) such as digital signatures and zero-knowledge proofs to protect participants’ privacy and confidentiality. These measures instil confidence among users and pave the way for the widespread adoption of decentralised systems. 

Typical example of Layer 0 protocol

Polkadot

Polkadot. Source: CoinSpot

Polkadot is a blockchain ecosystem centred around the Relay Chain. In essence, it is a network of networks, allowing even vastly different blockchain architectures to interact. Polkadot addresses a fundamental blockchain limitation through interoperability, transforming independent blockchains into components of a unified ecosystem. This approach allows secure exchange of information and currency and computer programs in a scalable manner. 

The adaptable architecture of Polkadot streamlines onboarding for new Web3 enterprises, offering developers scalability, interoperability, and security. Unlike the traditional process of creating a new blockchain, which involves constructing a unique state machine and consensus algorithm, Polkadot’s architecture employs the Substrate modular framework, allowing users to plug in required features and modify them as necessary. This flexibility empowers developers to tailor the chain architecture, select specific components, and connect to other ecosystems like Ethereum and Bitcoin through cross-ecosystem bridges.

Avalanche

The main innovation behind the Avalanche is the merging of three distinct blockchains, as opposed to the standard choice of two. 

Avalanche. Source: CoinSpot

Each blockchain in the AVAX ecosystem performs a specialised function, unlike a single blockchain doing all functions. The efficient allocation of work over many chains contributes to the Avalanche blockchain platform’s agility. The network can simultaneously achieve the appropriate scalability, decentralisation, and security levels. Let’s learn more about the capabilities of each blockchain under Avalanche’s three-blockchain architecture.

Exchange Chain

Also known as X-Chain, Exchange Chain is the distributed ledger technology used to develop assets on the AVAX blockchain and to facilitate asset transactions. AVAX coin, the network’s native token, is now the most popular cryptocurrency on the blockchain platform.

In contrast, other decentralised exchange tokens such as JOE, compete for widespread adoption. All X-chain transactions demand users to pay transaction fees in AVAX tokens. This is similar to the way of paying Ethereum gas costs when using ETH.

Contract Chain

The Contract Chain or C-chain is the next key aspect of the Avalanche cryptocurrency platform’s operation. Smart contracts are a crucial feature of the AVAX blockchain technology since they facilitate the creation of decentralised applications. At the same time, developers also make use of the platform’s scalability and security features. The contract chain executes smart contracts on the Avalanche blockchain and is compatible with the Ethereum Virtual Machine.

The EVM compatibility in C-chain enables the deployment of Ethereum smart contracts on the AVAX blockchain. Developers can access Avalanche capabilities using conventional Ethereum development tools. What relevance does this have in the crypto space? Numerous well-known Ethereum-based applications, particularly in the DeFi industry, such as Aave, benefit from deploying a variation of their product on the AVAX network.

Platform Chain

The platform chain or P-chain is the third component of Avalanche or AVAX’s primary invention. The P-chain’s fundamental goal is to enable anybody to develop layer 1 and layer 2 blockchain solutions. Users also build groups of L1 or L2 blockchain solutions.

In the Avalanche universe, such blockchains are referred to as subnets, with the P-chain serving as the default subnet. The P-chain aids in the landscape management of several Avalanche subnets by monitoring validators. Interestingly, subnets also assume responsibility for the P-validation. chain’s

Cosmos

Cosmos is an innovative network of interconnected blockchains for scalability and interoperability. With a vision to establish an Internet of Blockchains, Cosmos empowers individual blockchains to maintain their autonomy while facilitating seamless interaction within the ecosystem, ultimately enabling quick application transactions.

Cosmos. Source: Publis0x.

Key to the Cosmos architecture is the application of Byzantine fault tolerance (BFT) consensus algorithms, particularly the Tendermint consensus, which forms the foundation for each blockchain in the network. By harnessing Tendermint BFT’s proof-of-stake protocol, Cosmos Hub and the Cosmos SDK are powered, ushering in a new era of possibilities.

The Cosmos SDK creates open-source PoS blockchains with multi-assets. The Cosmos Hub fosters interchain token exchange, security, bridges to ETH and BTC, and cross-chain token management. Cosmos tackles sovereignty, scalability, and sustainability issues. It empowers sovereign blockchain apps via the SDK, ensures scalability with horizontal and vertical solutions, and minimises carbon footprint using PoS consensus.

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