What Are Altchains? Layer 0, Layer 1, And Layer 2 Explained

Introduction

This tutorial explains altchains, including their definitions, types, and how to use them. Altchains, or alternative blockchains, emerged as solutions to the limitations of Ethereum, particularly in scalability and transaction fees. Understanding altchains is essential for navigating the evolving blockchain landscape.

Step 1: Understanding Altchains

• Altchains refer to any blockchain that is not Bitcoin or Ethereum.
• They were developed mainly to address the challenges faced by Ethereum, such as:
  • High transaction fees
  • Slow transaction speeds
• The rise of altchains began around 2021, with developers creating more scalable and cost-effective alternatives.

Step 2: Layers of Blockchain Explained

• Layer 0:

  • This is the foundational layer that allows different blockchains to interoperate.
  • It includes protocols that connect various networks.

• Layer 1:

  • This is the primary blockchain layer, where transactions are processed and validated.
  • Examples include Bitcoin and Ethereum, which manage their own security and consensus.

• Layer 2:

  • These are protocols built on top of Layer 1 blockchains to enhance scalability.
  • They handle transactions off the main chain, reducing the load and improving speed.
  • Examples include payment channels and sidechains.

Step 3: Exploring Sidechains

• Sidechains are separate blockchains that run parallel to the main chain (Layer 1).
• They allow for secure transfer of assets between the main chain and the sidechain without congesting the main network.
• This enhances flexibility and scalability for applications requiring different functionalities.

Step 4: Understanding Altcoins

• Altcoins are any cryptocurrencies other than Bitcoin.
• They often serve specific purposes, such as:
  • Facilitating smart contracts
  • Enabling decentralized applications (dApps)
• Popular altcoins include:
  • Solana (SOL)
  • Polkadot (DOT)
  • Avalanche (AVAX)

Step 5: Introduction to EVMs

• Ethereum Virtual Machines (EVMs):
  • EVMs allow for the execution of smart contracts on the Ethereum network.
  • Many altchains are EVM-compatible, meaning they can run Ethereum smart contracts and applications.

Step 6: How to Use Altchains

• To start using altchains, follow these steps:
  1. Choose an Altchain: Examples include Solana, Polkadot, and Avalanche.
  2. Set Up a Wallet: Use wallets like Phantom for Solana to store your assets securely.
  3. Explore dApps: Use platforms like Solend for lending or Solscan for blockchain exploration.
  4. Conduct Transactions: Send and receive assets within the altchain using your wallet.

Conclusion

Altchains provide innovative solutions to the limitations of traditional blockchains. By understanding their structure and functionality, you can better navigate the blockchain ecosystem. Consider exploring different altchains, setting up wallets, and engaging with decentralized applications to enhance your experience in the crypto space. For further reading, check out resources like the CoinGecko website for detailed articles and guides.