Cryptocurrency is not only about Bitcoin and Etherium is divided into several “LAYER”. Each of these layers has different functions such as layer 1 as the blockchain itself, while layer 2 as the integrity of a third party above layer 1. Layer 1 and 2 have their own projects in the form of coins or tokens.
Various Projects based on the Crypto layer:
Layer 0 (L0)
Layer 0 or Basic Layer is a term for the internet, hardware, and connections that allow Layer 1 such as Bitcoin, Ethereum, Binance to run smoothly. Layer 0 allows several things to happen:
Allowing blockchains to interact with each other is an example of Cosmo (ATOM) , which creates an interoperable blockchain ecosystem thanks to the ‘Tendermint IBC’ (Inter-blockchain communication protocol). If a Dapp can work on one blockchain, it can work automatically on another as long as they are built using the same layer 0. Each transaction also becomes faster and cheaper.
Layer 1 (L1)
Layer 1 is the blockchains themselves (Bitcoin, Ethereum, and Binance) that process and complete transactions on their own blockchain. Proof of work (mining), Proof of Stake (Delegate) and all technical details such as blocking time and dispute resolution. The most important aspect of blockchain is solving the trilemma of blockchain, decentralization, security and scalability.
Layer 2 (L2)
Layer 2 is a third-party integration that is used in conjunction with layer 1 to improve scalability and transactions per second (TPS). Projects that occupy Layer 2 such as Matic (Polygon), Optimism, Arbitrum.
Layer 3 (L3)
Layer 3 is the application layer that interacts with the user like a UI. Layer 3 provides not only UI, but also utilities in the form of intra- and inter-blockchain operability, such as DEX, liquidity pool, and staking. Decentralized applications (dApps) are a type of layer 3 interface that provides real-world applications for blockchain technology. Projects from layer 3 are CryptoKitties, Decentraland (Mana), Uniswap, Pancakeswap, Axie Infinity.
In my opinion, the projects that have the potential to increase are mostly from Layer 1, because they will have their own ecosystem that will be used by Layer 2 and Layer 3.
