What are the Primary Functions of a Blockchain


A typical layer one blockchain, such as Ethereum and Solana, performs four primary functions, 1) execution, 2) settlement, 3) consensus, and 4) data availability.

  • What is the Execution Layer of a Blockchain?

Execution on a blockchain refers to the computation and processing of transactions to transition the blockchain between states.

  • What is the Settlement Layer of a Blockchain?

Settlement refers to dispute resolution. It is only relevant in a roll-up scenario and is optional in the case of monolithic layer 1s. Because execution on roll-ups is confirmed and verified on the base layer, any discrepancies or errors are resolved during settlement.

  • What is the Consensus Layer of a Blockchain?

Consensus is about blockchain transaction ordering and finality. Nodes of a blockchain network download and execute all transactions in a block and reach an agreement upon their ordering and validity.

  • What is the Data Availability Layer of a Blockchain?

Data availability refers to roll-up transaction data being made available on the base layer so anyone can recreate the state, execute the transactions, and verify their validity. Data availability is also related to roll-ups because transaction data on monolithic blockchains are available by default. 

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