What Are Blockchain Layers?
If you are unfamiliar with Bitcoin, you may have heard the phrase “Layer 2” or “Layer 3” used in connection with blockchain networks. Phemex.com offers a helpful summary:
• Layer 1 blockchain refers to the underlying blockchain architecture.
• Layer 2 blockchain refers to various protocols that are built on top of layer 1 to improve the original blockchain’s functionality.
• Layer 3 is represented by blockchain-based applications, such as decentralized finance (DeFi) apps, games, or distributed storage apps.
Among the notable layer 2 projects on Bitcoin are the Lightning Network, Liquid Network, and Omni Layer. Lightning Network (LN) is a layer 2 Bitc oin protocol that offers users a fast micro-payment platform. While crypto payments conducted via layer 1, the BTC chain itself, are slow and expensive, payments conducted via LN are executed very quickly and involve very low transaction fees.
The average transaction on Lightning Network is confirmed within seconds, and virtually all transactions are confirmed in less than a minute. In contrast, BTC layer 1 transactions take several minutes to confirm on average, and some transactions may remain in an unconfirmed state for days. For those who prefer a visuals, this graphic from Bitcoin Magazine, an online publication dedicated to Bitcoin news and developments, shows the connection between blockchain network layers:
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