TL;DR

• L0 handles shared infrastructure: networks, interoperability, and consensus frameworks.
  
  
• L1 is the base blockchain where core consensus, data availability, and execution occur.
  
  
• L2 builds on L1 to scale throughput, reduce fees, and extend functionality.
  
  
• Modular architectures (such as Altius Labs) blur rigid layer boundaries by separating execution from consensus and data.
  

Introduction

“Blockchain layers” are often explained as a neat hierarchy, but in practice the boundaries are less rigid. Over the past few years, as throughput demands increased and execution-heavy applications emerged, the industry has moved away from monolithic designs toward modular architectures. This shift changed how developers think about L0, L1, and L2 — not as stacked tiers but as cooperative components of a distributed system.

Understanding these layers matters because the architecture determines a chain’s performance profile: its security model, transaction cost, execution throughput, and interoperability guarantees. It also influences how new ecosystems form. Framework-level networks (L0s), base settlement layers (L1s), and scaling layers (L2s) all solve different problems but increasingly interact through shared standards and cryptographic guarantees.

Altius Labs’ work toward a modular execution layer fits within this broader evolution, offering an example of how next-generation chains are rethinking the boundaries between layers.

L0: The Network and Infrastructure Layer

L0 is the foundational infrastructure that supports multiple blockchains. It is not a “chain below L1,” but rather a set of shared components that other chains use for networking, consensus, interoperability, or security.

In traditional computing terms, L0 resembles a platform or runtime: it provides the scaffolding that enables independent chains to function and connect.

What Defines an L0?

An L0 usually offers some combination of:

• Networking and communication rails

Nodes discover one another, propagate blocks, and communicate state changes across chains.

• Networking and communication rails

Nodes discover one another, propagate blocks, and communicate state changes across chains.

• Consensus frameworks

Not full blockchains, but SDKs or templates that help new chains define validator logic, governance, or proof systems.

• Shared security or validation

A pool of validators may secure multiple connected chains, reducing bootstrap cost for new ecosystems.

• Interoperability primitives

Message passing, bridging frameworks, and routing layers that allow chains to share state or assets.

An L0 does not execute end-user applications by itself. It enables other networks, often L1s or appchains, to build on top of a common foundation.

Why L0 Exists

When new blockchains began proliferating around 2017–2020, developers realized that launching a secure network from scratch was inefficient. Maintaining a validator set, designing consensus, writing messaging protocols, and securing liquidity all required enormous effort.

L0s emerged to provide:

• Easier chain deployment
  
  
• Shared security models
  
  
• Common communication standards
  
  
• Unified tooling for appchains and rollups
  

This is especially relevant in ecosystems moving toward modularity, where execution, consensus, and data availability no longer need to live on the same chain.

Examples of L0 Functions

• A shared validator set can secure multiple independent execution environments.
  
  
• A message-passing protocol can allow assets to move atomically between appchains.
  
  
• A network framework can provide the consensus logic and peer-to-peer layer for new blockchains.
  

L0s do not compete directly with L1s; they enable them.

L1: The Base Blockchain Layer

L1 is the layer most people mean when they say “blockchain.” It contains the core components that make a chain independent: consensus, execution, mempool logic, and data availability.

Unlike L0, an L1 is responsible for actually maintaining a canonical state and executing user transactions.

What L1s Do

1. Maintain the canonical ledger

All validated transactions settle on the L1. Even when L2s exist, settlement happens here.

2. Run a consensus mechanism

L1 validators or miners agree on canonical ordering of transactions.

3. Provide data availability

Blocks must be fully published so that any participant can verify state transitions.

4. Execute or verify computation

Some L1s execute smart contracts directly; others verify proofs produced by L2s or off-chain environments.

L1s define the base security model for everything built on top of them.

Monolithic vs Modular L1s

For years, L1s followed a monolithic design: execution, settlement, and data availability lived on the same chain. This limited throughput because every node had to process every transaction.

Modern L1s increasingly shift toward modular designs, separating:

• Execution
  
  
• Consensus
  
  
• Settlement
  
  
• Data availability
  

This separation allows higher throughput and specialized performance layers. Altius Labs fits into this shift by decoupling execution from consensus and creating horizontally scalable execution environments.

L1 Bottlenecks

Even high-performance L1s face constraints:

• State growth creates storage and node operation challenges.
  
  
• Execution limits prevent complex workloads from scaling.
  
  
• Mempool congestion leads to fee spikes.
  
  
• Validator hardware requirements increase over time.
  
  
• Sequential execution pipelines restrict throughput.
  

These constraints are why L2s (and more broadly, modular execution layers) gained importance.

L2: The Scaling and Extension Layer

L2s are built on top of L1s to scale throughput, reduce fees, and enable specialized execution environments. They rely on the L1 for settlement and finality but perform computation elsewhere.

An L2 lives “above” an L1 logically, but the relationship is more symbiotic than hierarchical.

What L2s Rely On From Their L1

1. Security guarantees
   Fraud proofs, validity proofs, or settlement logic anchor back to the L1.
   
   
2. Data availability
   Transaction data must be published somewhere verifiable.
   
   
3. Canonical settlement
   The L1 ultimately decides if an L2 state transition is valid.
   

Because L2s outsource these responsibilities to the L1, they can optimize for execution speed, EVM compatibility, parallelism, or specialized workloads without carrying the full burden of consensus.

Types of L2 Designs

Although names vary, most L2s fall into one of three groups:

Rollups

They execute transactions off-chain, then submit proofs or data to the L1. Rollups inherit L1 security.

Validiums

Data is stored off-chain, but proofs are still posted to the L1. This enables higher throughput with different trust assumptions.

State channels and plasma (less common)

Earlier approaches where users transact off-chain and settle snapshots on the L1.

The core theme: L2s improve performance by not having every node replicate every computation.

Why L2 Exists

L2s solve constraints that L1s cannot address without compromising decentralization:

• Lowering fees by reducing L1 execution load
  
  
• Increasing throughput with higher execution concurrency
  
  
• Supporting specialized application environments
  
  
• Enabling experiments without changing L1 protocol rules
  

However, L2s also introduce new complexity in bridging, sequencing, proof systems, and withdrawal times.

Summary of Layer Responsibilities

How L0, L1, and L2 Interact in Modern Architectures

For a long time, the industry treated L0, L1, and L2 as discrete layers arranged in a strict hierarchy. In practice, modern blockchain ecosystems are far more interdependent. Layers form composable systems, not stacks.

To understand this, look at the responsibilities each layer can outsource:

• L1s outsource execution to L2s to reduce congestion.
  
  
• L2s outsource security and settlement to L1s to avoid maintaining their own validator sets.
  
  
• L1s outsource interoperability and messaging to L0s to connect with other networks or appchains.
  
  
• Appchains outsource both consensus and execution frameworks to L0s, reducing development overhead.
  

Instead of a pyramid, layers function more like distributed modules. The rise of modular blockchains, including frameworks like those we are building at Altius Labs, is a direct response to the limitations of monolithic designs that tried to do everything in one place.

The Modular Turn: Why Rigid Layer Definitions Are Fading

The shift toward modularity is reshaping what “layer” means.

Traditionally:

• L1 = executes + settles + stores data
  
  
• L2 = scales execution
  
  
• L0 = connects ecosystems
  

But modern architectures split these responsibilities across multiple components:

• Execution layer: runs transactions, potentially in parallel
  
  
• Settlement layer: verifies proofs and anchors state
  
  
• Consensus layer: orders blocks and maintains liveness
  
  
• Data availability layer: ensures blocks are readable and verifiable
  
  
• Messaging layer: moves state between chains
  

The original L0/L1/L2 terminology still helps conceptualize roles, but the underlying mechanics now depend on specialized components, not monolithic chains.

Altius Labs reflects this movement by building a horizontally scalable execution layer designed to plug into existing consensus and settlement frameworks rather than replicating them. This approach pushes execution capacity upward without forcing a trade-off against security or decentralization.

Deep Dive: L2 Mechanics and Their Trade-offs

L2s are often discussed in the context of throughput, but their internal mechanics involve several choices that influence performance, security, and user experience.

We can break L2 design into four dimensions:

1. Execution Environment

L2s can run:

• EVM-compatible execution, which maximizes developer adoption
  
  
• Custom VMs, which enable parallelism or specialized workloads
  
  
• WASM runtimes, which open the door to multi-language smart contract development
  

Execution environments determine the “shape” of the applications that L2s can support. Custom runtimes offer performance gains but require new tooling.

2. Proof System

How the L2 proves validity to the L1 defines both security and settlement speed:

• ZK proofs: fast finality, strong security guarantees, complex proving systems
  
  
• Fraud proofs: simpler to implement, rely on challenge windows
  
  
• Hybrid approaches: use validity proofs for some transactions and fraud proofs for others
  

The proof mechanism is what anchors the L2’s state transitions back to the L1’s security.

3. Data Availability Strategy

Data availability (DA) is the cornerstone of verifiable computation. L2s can publish data:

• On the L1, which inherits full security
  
  
• On a specialized DA layer, which reduces costs
  
  
• Partially off-chain, which increases throughput but changes security assumptions
  

If DA is weak, the L2 cannot be fully trustless. This is one of the reasons DA layers and modular stacks have gained relevance.

4. Sequencers and State Commitments

Every L2 must decide how it orders transactions and posts commitments:

• Centralized sequencers
  Simple, fast, but introduce short-term trust assumptions.
  
  
• Distributed sequencers
  Improve censorship resistance but add complexity.
  
  
• Shared sequencer networks
  An emerging approach that may unify ordering for multiple rollups.
  

Sequencing design affects latency, MEV dynamics, and decentralization.

The Future: Execution Layers as the Primary Scaling Engine

As the ecosystem matures, execution capacity, not consensus innovation, is emerging as the main bottleneck for blockchain performance. Most chains today can reach consensus efficiently, but they cannot process enough transactions to meet real-world demand without raising fees or increasing hardware costs.

Execution is the new constraint.

Several trends highlight this shift:

1. Horizontal Scaling Over Vertical Scaling

Vertical scaling (bigger blocks, faster hardware) collides with decentralization.
Horizontal scaling distributes execution across:

• multiple rollups
  
  
• parallel virtual machines
  
  
• app-specific runtimes
  
  
• execution sharding
  

Execution layers like those developed at Altius Labs fit into this evolution. Instead of forcing an L1 to handle execution directly, they allow workloads to spread horizontally without compromising the underlying consensus.

2. Stateless and Lightweight Clients

As state size grows, full nodes become harder to run. Stateless execution reduces the burden by allowing nodes to verify transactions without storing the full state.

This is especially relevant for L2s producing large volumes of transactions but needing to maintain verifiability across the network.

3. VM-Agnostic Architectures

A single VM model is insufficient for all application types. High-performance finance, AI inference, gaming, and real-time data processing require different execution guarantees.

VM-agnostic designs, an area we atAltius Labs focus on, allow developers to choose the environment best suited for their workload without splitting the ecosystem.

4. Decoupling Execution From Consensus

This is the core feature of next-generation modular stacks.
Consensus maintains order and safety; execution handles computation.

By decoupling them:

• execution can scale independently
  
  
• different apps can run concurrent workloads
  
  
• chains can upgrade execution logic without resetting consensus
  
  
• performance gains do not reduce validator decentralization
  

This separation is the foundation of the “modular era”.

What This Means for Developers

Understanding L0, L1, and L2 distinctions helps developers choose the right environment for their application. But more importantly, understanding how these layers interact highlights new trade-offs in performance, trust assumptions, cost models, and developer ergonomics.

If you build at L1:

You prioritize security and canonical settlement but must handle increasing operational demands.

If you build at L2:

You gain throughput, flexibility, and lower fees—but must design for DA constraints, proof systems, and bridging UX.

If you build at L0:

You create frameworks that multiple independent chains depend on, requiring rigorous attention to interoperability and validator incentives.

If you build modular execution layers:

You reshape the boundaries entirely, focusing on scalability while outsourcing consensus and DA to specialized layers. This is where much of the industry’s innovation is headed.

Conclusion

Blockchain layers , L0, L1, and L2,  were originally useful abstractions for explaining where certain responsibilities lived. But as the industry has shifted toward modularity, the boundaries between layers have blurred. Today, networks operate more like distributed systems composed of specialized components, each handling only the tasks they are best suited for.

• L0s provide connectivity, frameworks, and shared security.
• L1s anchor settlement, consensus, and data availability.
• L2s deliver scalable, flexible execution environments.
• Modular execution layers, extend the model further by allowing execution to scale horizontally without burdening base layers.

The next phase of blockchain development will be defined not by how we name layers, but by how we compose them. The real challenge,  and opportunity,  lies in designing systems where execution, consensus, and data layers operate independently yet cohesively, enabling performance gains without compromising trust.