Blockchain layering: How Layer 3 applications operate on Layer 1 and Layer 2 fundamentals

When we look at the blockchain ecosystem, we find that it is built on three layers of infrastructure. But let’s start with what we see most often – applications that we actually use.

Layer 3: Where blockchain becomes a practical (Application layer)

Layer 3 is the layer that end users really know. This is where real use cases are born. These are applications built on stronger foundations of the lower layers.

Specifically, in the DeFi segment, we have Uniswap and PancakeSwap, where you can swap tokens. In the NFT world, it’s OpenSea or Bloom. Gamification on blockchains? Axie Infinity is a classic example. Layer 3 applications focus on user comfort and intuitive interfaces. Without that, blockchain would just be a record in a database.

These applications leverage the advantages of lower layers – speed from Layer 2 and security from Layer 1 – and offer it to users in a friendly form.

Layer 2: The engine for Layer 3 (Scaling solutions)

Why do we even have Layer 2? Because basic blockchains are not designed for billions of microtransactions.

Lightning Network works for Bitcoin – offering lightning-fast and inexpensive payments. For the Ethereum ecosystem, there is Polygon as a sidechain solution. If you want rollup technology, you have Arbitrum and Optimism. All these tools do one thing: take some of the load off Layer 1 and process transactions off-chain.

Layer 2 solutions allow you to perform thousands of transactions without clogging the main network. And what is most important? Security remains. As a result, Layer 3 applications can run efficiently.

Layer 1: The solid foundation of everything (Base layer)

And if you want to look even lower – where everything begins – that is Layer 1.

Bitcoin (BTC) is a pioneer – a decentralized network for peer-to-peer transactions. Ethereum (ETH) added smart contracts and created space for dApps. Solana, Cardano, and Polkadot offer their own approaches to security and consensus.

Layer 1 blockchains use mechanisms like Proof of Work or Proof of Stake to reach consensus. They are decentralized and secure – but also slower and more expensive than the layers above. This is essentially a trade-off: security and decentralization versus speed and cost.

Why the structure works

Blockchain layering is a genius design. Layer 1 provides security and decentralization. Layer 2 optimizes for speed and cost. And Layer 3 then creates applications that people actually want to use. Without all three layers, crypto could not become mainstream.