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Web3 Security Stack: From Infrastructure To Ecosystem

Optimism Blockchain 101: Unlocking The Potential Of Layer 2 Scaling

<p>Blockchain architecture refers to the components and subcomponents or layers that make up a complete blockchain system. Each layer has a unique role, from storing data to maintaining network connectivity and ensuring consensus across the system.</p>



<p>Understanding these layers is crucial for blockchain developers and start-up entrepreneurs seeking to leverage blockchain technology effectively.</p>



<p>This article aims to demystify the intricacies of blockchain architecture by breaking down its layers and their respective functionalities. Our goal is to help you navigate the complexities of blockchain design, optimize performance, and identify potential <a href="https://hacken.io/insights/blockchain-security-vulnerabilities/">security vulnerabilities</a>.</p>



<h2 class="wp-block-heading"><strong>Types Of Blockchain Architecture</strong></h2>



<p>Generally speaking, there are four types of blockchains: public, private, consortium, and hybrid. Naturally, the specifics of blockchain architecture depend on the type.</p>



<figure class="wp-block-table is-style-stripes"><table><tbody><tr><td><strong>Type of Blockchain&nbsp;</strong></td><td><strong>Description</strong></td><td><strong>Scalability</strong></td><td><strong>Examples</strong></td></tr><tr><td><strong>Public Blockchain</strong></td><td>A decentralized blockchain accessible to anyone with an internet connection</td><td>Limited</td><td>Bitcoin, Ethereum</td></tr><tr><td><strong>Private Blockchain</strong></td><td>A blockchain that is only accessible to a select group of individuals or organizations</td><td>High</td><td>Hyperledger Fabric, Corda</td></tr><tr><td><strong>Hybrid Blockchain</strong></td><td>A blockchain that combines the features of both public and private blockchains</td><td>High</td><td>Dragonchain, EWF Baseline</td></tr><tr><td><strong>Consortium Blockchain</strong></td><td>A blockchain that is governed by a consortium of organizations</td><td>High</td><td>R3 Corda, Hyperledger Fabric</td></tr></tbody></table></figure>





<h3 class="wp-block-heading"><strong>Public Blockchains</strong></h3>



<p>Public blockchains are open to everyone and are not restricted by permissions. They can employ a variety of consensus mechanisms, although scalability can be challenging due to the increasing demands of a broad user base. Bitcoin and Ethereum are classic examples.</p>



<h3 class="wp-block-heading"><strong>Private Blockchains</strong></h3>



<p>Private blockchains are created for enterprise needs. It is a permissioned blockchain that is only accessible to a selected few, typically for business organizations. Hyperledger Fabric is one of the most prominent private blockchains.</p>



<h3 class="wp-block-heading"><strong>Hybrid Blockchains</strong></h3>



<p>Public and private blockchains have their pros and cons. The idea behind a hybrid blockchain, like Dragonchian, is to get the best of the two worlds.</p>



<h3 class="wp-block-heading"><strong>Consortium Blockchains&nbsp;</strong></h3>



<p>Consortium blockchains, such as R3 Corda, are owned and governed in partnership, i.e., when several private nodes form a consortium blockchain.</p>



<h2 class="wp-block-heading"><strong>Layered Structure Of Blockchain Architecture</strong></h2>



<p>Depending on a blockchain type, there are different ways to implement its architecture, and there is no standard for it. However, most blockchains typically have the following structure:</p>



<figure class="wp-block-table is-style-stripes"><table><tbody><tr><td><strong>Layer</strong></td><td><strong>What it does</strong></td><td><strong>Components</strong></td></tr><tr><td><strong>Application</strong></td><td>Hosts applications that interact with the blockchain.</td><td>Smart Contract, User Interface, Decentralized Applications</td></tr><tr><td><strong>Services &amp; Optional Components</strong></td><td>Enhances the functionality of the blockchain with additional services.</td><td>Governance/DAOs, Oracles, Wallets, Blockchain Monitor</td></tr><tr><td><strong>Protocol/Consensus</strong></td><td>Defines and regulates how nodes in a blockchain come into agreement.</td><td>Consensus, Sidechains, Permissioned and Permissionless, Propagation Protocol, Virtual Machines</td></tr><tr><td><strong>Network</strong></td><td>Facilitates effective discovery and interaction among nodes.</td><td>Communication Mechanisms, Trusted Execution Environments, Recursive Length Prefix</td></tr><tr><td><strong>Data</strong></td><td>Caters for the creation, management, and encryption of data.</td><td>Digital Signatures, Hash, Merkle Tree, Data Blocks, Asymmetric Encryption, Storage</td></tr><tr><td><strong>Hardware/Infrastructure</strong></td><td>Provides the physical resources needed to host a blockchain.</td><td>Mining, Nodes, Tokens, Servers</td></tr></tbody></table></figure>



<h3 class="wp-block-heading"><strong>Application Layer</strong></h3>



<p><em>Provides blockchain-based applications for the end user.</em><br><br>The application layer is the end product of the entire system offering specific products for the users, i.e., wallet, lending, staking, etc.</p>



<p>The application layer starts with a smart contract, a programmable code that governs state transitions. It can function as an escrow, payment channel, or vault and is known by different names in various ecosystems, like "programs" in Solana and "chaincode" in Hyperledger. Smart contracts are a frequent target for hackers, as any critical error in its code can be exploited for illegal gains.&nbsp;</p>



<p>Usually, users don’t interact with the smart contract directly. Instead, they rely on a front end of a Web3 application or an API. The Uniswap website is an example of a decentralized app combining UI and smart contracts.</p>



<h3 class="wp-block-heading"><strong>Services And Optional Components</strong></h3>



<p><em>Amplifies blockchain capabilities with additional features.</em><br><br>The services layer creates Web3 interconnection, removing barriers and enabling smooth interactions. Optional elements include Decentralized Autonomous Organisations (DAOs), aiding administration and communication in networks like Arbitrum and Polygon, but absent in Bitcoin and Ethereum. <a href="https://hacken.io/discover/blockchain-oracles/">Oracles</a> bridge Web3 applications with real-world data on asset pricing, aiding off-chain computations. Hot wallets store on-chain assets but also serve as access points, for example, Metamask or Kaikas – a native wallet for Klaytn. Lastly, block explorers track chain health, helping detect technical glitches and security breaches and mitigate issues early.&nbsp;</p>



<h3 class="wp-block-heading"><strong>Protocol (Consensus) Layer</strong></h3>



<p><em>Set rules for node agreement on the state</em>.<br><br>The protocol layer sets the rules for blockchain participation, with the consensus mechanism being its key component. Consensus ensures agreement among nodes for block mining and processing and outlines validator requirements, varying across proof-of-work, proof-of-stake, and other <a href="https://hacken.io/discover/consensus-mechanisms/">consensus mechanisms</a>. Propagation protocol broadcasts decisions, while protocol audits ensure security against threats like 51% attacks.</p>



<p>Blockchains can be permissioned (limiting access) or permissionless (open to all). Sidechains, operating parallel to main chains with separate consensus mechanisms, offer enhanced capabilitiesю An example is the Polygon-Ethereum relationship.</p>



<h3 class="wp-block-heading"><strong>Network Layer</strong></h3>



<p><em>Provides for peer node interaction</em>.<br><br>The network layer enables effective discovery and interaction among peers called nodes. Typically, a node locates a bootnode, which scans for available peers and initiates bonding. As information circulates, it's safeguarded through a Trusted Execution Environment (TEE) to maintain integrity. Node session maintenance varies across networks; for example, Ethereum employs Recursive Length Prefixes, defining the time nodes take to locate, authenticate, and share data.</p>



<h3 class="wp-block-heading"><strong>Data Layer</strong></h3>



<p><em>Ensures secure and confident message transmission</em>.<br><br>The data layer of blockchain technology is primarily concerned with data storage and structure. It houses the blockchain, a linear succession of blocks that store transaction information. Depending on the specific blockchain, the data structure can range from a simple transaction list, such as the one used by Bitcoin, to a more intricate structure, like Ethereum's state trie, which stores contract state information.</p>



<p>While the specifics of transaction addition and hashing used aren't the focus here, it is important to note that the data layer does play a role in maintaining integrity and privacy. This is the layer where most cryptographic primitives used in the protocol – signature algorithms, cryptographic libraries, and public-private key pairs — are defined and should be tied to high-security standards.</p>



<p>Asymmetric encryption is a critical component, with a public-private key pair keeping the data confidential. The public key is associated with a wallet address, and the private key grants control over assets tied to that address.</p>



<p>Every transaction is accompanied by a digital signature, a cryptographic mechanism that validates the control of the correct private key without revealing it, thus ensuring security. Cryptographic signatures are generated by signature algorithms such as The Elliptic Curve Digital Signature Algorithm, Rivest–Shamir–Adleman, and so on.</p>



<h3 class="wp-block-heading"><strong>Hardware/Infrastructure Layer</strong></h3>



<p><em>Provides the necessary capacities to host a blockchain.</em><br><br>Blockchain architecture extends to hardware and infrastructure. In this layer—In Proof-of-Work consensus protocols—miners and validators operate, with miners creating new blocks using specialized equipment (GPU, ventilator, stabilizer) and electricity, and validators running nodes for block mining. As for data storage, some blockchains opt for third-party decentralized data hostings, such as Filecoin, IPFS, Arweave, or Firebase, due to capacity limitations.</p>



<p>Nodes, or clients, come in three types: full, light, and archive nodes. Full nodes store the entire chain's state, participate in consensus processes, and provide data upon request. Light nodes host only block summaries, while archive nodes store transaction data from the genesis block to the present, available for user queries.</p>



<p>The infrastructure layer also includes virtual machines, which act like operating systems and host smart contracts. Blockchains often have native virtual machines, such as the Avalanche Virtual Machine for Avalanche and the Ethereum Virtual Machine for Ethereum. However, a blockchain can also be compatible with other virtual machines.</p>



<h2 class="wp-block-heading"><strong>Understanding Layers 1 and 2 Blockchains</strong></h2>



<p>Application, Services, Protocol, Network, Data, and Infrastructure layers make up a complete blockchain. However, it's also important to understand <a href="https://hacken.io/discover/l1-l2-scalability/">L1 vs. L2 scalability solutions</a>, as these are the “layers” you’ll come across most often.</p>



<figure class="wp-block-table is-style-stripes"><table><tbody><tr><td></td><td><strong>Features</strong></td><td><strong>Scaling Solutions</strong></td><td><strong>Examples</strong></td></tr><tr><td><strong>Layer 1</strong></td><td>Independent, Secure, Permissionless</td><td>Sharding, Forks</td><td>Ethereum, Bitcoin, Solana</td></tr><tr><td><strong>Layer 2</strong></td><td>Dependent, Scalable, Fast</td><td>State Channels, Nested Blockchains, Rollups, Sidechains</td><td>Polygon, Lightning Network, Arbitrum</td></tr></tbody></table></figure>



<h3 class="wp-block-heading"><strong>Layer 1 Blockchains</strong></h3>



<p>Ethereum and Bitcoin are the two most dominant L1s in Web3. Layer 1 blockchains are foundational and self-sustaining chains. They are mostly public and permissionless. A typical layer 1 blockchain has all components of blockchain architecture.</p>



<p>The scalability of most L1s, however, can be quite modest due to their technical bottlenecks. Some L1s have been proactive with native scaling solutions. For instance, Ethereum is implementing sharding to fast-track its throughput.</p>



<h3 class="wp-block-heading"><strong>Layer 2 Blockchains&nbsp;</strong></h3>



<p>Layer 2 blockchains provide scaling in the form of higher throughput and lower gas while relying on L1 for security and underlying operations. But they typically implement a different consensus layer.</p>



<p>There are various creative ways L2 carries out its scaling activities: running a side chain, state channels, rollups, or nested blockchains. The Lightning Network and Stack are remarkable examples of an L2 in the Bitcoin ecosystem.</p>



<h2 class="wp-block-heading">Final Thoughts</h2>



<p>A blockchain is an eventual product of different compartments and layers. These layers provide it with various factors it needs to function properly.</p>



<p>Note, however, that one of the greatest pain points of blockchain technology is security breaches. Each layer of the blockchain is prone to vulnerabilities. To that end, the protocol, dApp, and smart contracts should be <a href="https://hacken.io/services/blockchain-security/blockchain-protocol-security/">comprehensively audited</a> to block off potential security threats.</p>





<hr class="wp-block-separator has-css-opacity"/>



<h2 class="wp-block-heading"><strong>FAQs</strong></h2>


<div class="wp-block-rank-math-faq-block"><div class="rank-math-faq-item"><h3 class="rank-math-question"><strong>What are the 5 main layers of blockchain architecture?</strong></h3><div class="rank-math-answer">A blockchain needs 5 main layers in its architecture: Application Layer, Protocol (Consensus) Layer, Network Layer, Data Layer, and Hardware/Infrastructure Layer.</div></div><div class="rank-math-faq-item"><h3 class="rank-math-question"><strong>What are the different types of blockchain architecture?</strong></h3><div class="rank-math-answer">Different types of blockchain architecture include public blockchains, private blockchains, hybrid blockchains, and consortium blockchains.</div></div><div class="rank-math-faq-item"><h3 class="rank-math-question"><strong>What are the components of blockchain architecture?</strong></h3><div class="rank-math-answer">A blockchain has different components based on why it was created. Generally, the components often include consensus algorithms, P2P nodal interactions, hash, system management, etc.</div></div></div>

Blockchain Architecture Layers: A Comprehensive Guide

Consensus Mechanisms In Blockchain: A Deep Dive Into The Different Types

<p>The use cases of blockchain are becoming more prominent over time. However, some weaknesses beset the <a href="/services/blockchain-security/blockchain-protocol-security/">security of blockchain protocols</a>. A Sybil Attack is a notable example of these weaknesses.</p>



<h2 class="wp-block-heading"><strong>What is a Sybil Attack?</strong></h2>



<p>A Sybil Attack is a form of online security violation where an entity has numerous fake identities on a blockchain for malicious reasons.</p>



<p>The origin of the term “Sybil” can be traced back to the 1973 novel by Flora Schreiber. It has a character named Sybil who has an identity-related medical issue. She would always try to operate with multiple identities.</p>



<p>The term crept into tech after John R. Douceur published<a href="https://www.freehaven.net/anonbib/cache/sybil.pdf"> a short research paper</a> some decades back. Apart from explaining the nature of Sybil Attacks, John also classified them into two categories.</p>



<p>The first is the direct Attack, and the second is the indirect attack.</p>



<ol>
<li><strong>Direct Sybil Attack</strong></li>
</ol>



<p>A Direct Sybil Attack occurs when a malicious node directly interacts with honest nodes in the protocol. This type of attack is particularly effective because the genuine nodes are unable to detect that the fake nodes are not legitimate.&nbsp;</p>



<p>Consequently, the attacker can manipulate the genuine nodes into taking actions that align with the attacker's self-interests.</p>



<ol start="2">
<li><strong>Indirect Sybil Attack</strong></li>
</ol>



<p>A typical indirect Sybil Attack happens when fake nodes come in contact with one or more nodes connected to the authentic nodes.</p>



<p>In contrast to a Direct Sybil Attack, hackers use intermediary/proxy nodes to launch an indirect attack. The intermediary nodes, which are positioned between the Sybil node and the honest ones, represent a single or a few points of failure. By exploiting these intermediary nodes, hackers can launch an attack on the honest nodes that is not as easily detected as a direct Sybil Attack.</p>



<p>The logic is that once a Sybil node has influenced the middle nodes, it would compromise the authentic nodes.</p>



<h3 class="wp-block-heading"><strong>What triggers the Sybil Attack?</strong></h3>



<p>A Sybil Attack is a high-severity security threat that has assailed some blockchains. The question is, “What are the factors that trigger a Sybil Attack?”</p>



<p>First, a weakness in the node creation process can be a trigger. Once it is easy to create and run a node, an adversary can easily set up multiple Sybil nodes and attack anytime. Hence, the reason some blockchain protocols often resort to a financially flamboyant node creation process.</p>



<p>Second, how effective is the node validation system? Sybil Attacks can easily be detected and expunged when the validation system points them out on time. So if the validation system can easily be manipulated, this can trigger a hacker to give it a try.</p>



<p>Most importantly, huge revenues in a blockchain magnetize hackers. Throughout history, hackers have always assaulted high-volume blockchain protocols with Sybil Attacks. Examples include Monero, Verge, and Ethereum Classic.</p>



<h3 class="wp-block-heading"><strong>Examples of the Sybil Attack</strong></h3>



<p><a href="https://arstechnica.com/information-technology/2014/07/active-attack-on-tor-network-tried-to-decloak-users-for-five-months/">The Tor attack in 2014</a> was one of the earliest Sybil Attacks against a P2P network. Tor is a peer-to-peer network that facilitates private conversations.</p>



<p>The attackers assailed it that year to discover the locations and identities of some Tor users. In the unofficial post-mortem report, the Tor team found some facts that the attack was a Sybil Attack.</p>



<p>The attacker-controlled about 115 relays from a single IP address. This means that only one person was in charge of the numerous relays. The attacker was able to get some unduly large influence over the network and access some pieces of information.</p>



<p>A similar and probably deadlier Sybil Attack happened in 2020 on the same Tor network. The hackers behind the 2020 attack focused more on the Bitcoin holders that use Tor.</p>



<p>The attacker who controls a lot of fake Tor relays would intercept the cyber-movements of Bitcoin holders and strip them of their funds.</p>



<h2 class="wp-block-heading"><strong>What threats can Sybil Attacks cause?&nbsp;</strong></h2>



<p>Sybil Attacks can be disastrous to the integrity of a blockchain. These two major threats they can cause:</p>



<ol>
<li><strong>Breach of Privacy</strong></li>
</ol>



<p>Blockchain technology places a premium on security and privacy. But Sybil Attack assaults the core of this tenet. A threat actor can run a malicious node to collect sensitive details that the honest nodes are passing.</p>



<p>Depending on the information that the attacker seeks to get, a Sybil Attack places the blockchain at risk. One of the details can be illegally obtaining the IP addresses of those behind the honest nodes.&nbsp;</p>



<ol start="2">
<li><strong>Hijacking a Blockchain</strong></li>
</ol>



<p>In the context of blockchain, one of the <a href="/insights/blockchain-security-vulnerabilities/">vulnerabilities</a> that a Sybil Attack can cause is the 51% attack. A <a href="https://hacken.io/discover/51-percent-attack/">51% attack</a> happens when a single person or group gains total dominance over a blockchain.</p>



<p>Such that the inauthentic or malicious nodes outnumber the honest nodes. This power gives the attacker the upper hand in the protocol's decision-making processes.</p>



<p>As a result, the former can outvote the latter and hijack such a blockchain. It is a fatal security assault that is bound to happen with a Sybil Attack. This was the exact thing that happened during the Litecoin Cash Attack in 2019.</p>



<ol start="3">
<li><strong>Block Withholding Attack</strong></li>
</ol>



<p>A <a href="https://hacken-3.gitbook.io/l1-security/infrastructure-layer#block-withholding-attack">Block Withholding Attack</a> can also occur as a result of a Sybil Attack. In this type of attack, a significant number of validators who are acting against the blockchain's interests refuse to add new blocks to the chain.&nbsp;</p>



<p>This can result in the blockchain becoming stagnant and unusable over time, requiring intervention to restore its functionality for users.</p>



<h2 class="wp-block-heading"><strong>How do blockchains prevent Sybil Attacks?</strong></h2>



<p>Sybil Attacks can lead to complications on a blockchain and compromise its operation. After careful analysis, blockchains have also come up with some preventive measures.</p>



<p>We shall consider a few of them subsequently:</p>



<ol>
<li><strong>Identity Validation</strong></li>
</ol>



<p>John Douceur himself recommended this Sybil attack prevention in his research paper. According to him, there are two basic ways to authenticate identities. The first is direct, and the second is indirect.</p>



<p>Direct authentication works so that the central authority checks and verifies every new validator that applies to join the network as a peer. They can require details such as IP address, name in real life, etc.</p>



<p>But in an indirect authentication, some already verified validators attest to the genuineness of the new to-be validator. All the personal information does not matter; only the vouching does.</p>



<p>Each of these validating techniques has its good and bad sides. The direct authentication model is susceptible to the applicant supplying incorrect information.</p>



<p>Similarly, indirect authentication can be centralized because the existing validators will only approve the people they know. This is against the decentralized nature of blockchain.</p>



<ol start="2">
<li><strong>Setup a Hierarchical System</strong></li>
</ol>



<p>New nodes or identities on the blockchain are likely to be Sybil nodes. As a result, they should be placed under suspicion for some time till their overall genuineness is confirmed.&nbsp;</p>



<p>Create a structure where the integrity of nodes is in cadets. This is why a hierarchical system is a sure prevention of Sybil Attacks.&nbsp;</p>



<p>Those who have been in the network for a long time should have higher powers than the newbies. Such that the new Sybil nodes cannot carry out a major attack even if they want to.&nbsp;</p>



<ol start="3">
<li><strong>Utilize Social Trust Graphs</strong></li>
</ol>



<p>A social graph is the visual representation of every validator within a network. So trust graphs then classify validators based on their honesty so far.</p>



<p>If the algorithm notices some foul nodes, it will indicate that their trust level is low. This way, the main operators of a blockchain network can quickly detect Sybil nodes.</p>



<p>There are currently several social trust graph techniques, such as SybilRank, SybilGuard, the Advogato Trust Metric, and so on. But note that social trust graphs do not have 100% speed and accuracy.&nbsp;</p>



<p>Thus, it is recommended that they are used with other preventive measures for battle-tested security.</p>



<ol start="4">
<li><strong>Create Custom Defense Systems</strong></li>
</ol>



<p>Generic security measures can still be susceptible to attacks. The more specific the defense, the better. This is why some blockchains are incorporating custom defense mechanisms to be more Sybil-resistant.</p>



<p>A similar example is how Invisible Internet Project (I2P), a private p2p protocol, utilizes Kademlia to prevent Sybil Attacks. Kademlia is a form of a distributed hash table on which Sybil Attacks are difficult to happen.</p>



<p>These days, there are also developments of some Sybil-resistant algorithms. They include DSybil, SumUp, and Whānau.</p>



<ol start="5">
<li><strong>Costly Consensus Mechanisms</strong></li>
</ol>



<p>The main intention of attackers during Sybil Attacks is to take over the blockchain to siphon funds. But running a costly consensus mechanism is an effective measure that checkmates such purposes.</p>



<p>On the Ethereum blockchain, for instance, anyone needs to stake 32 ETH to run an Ethereum node. 32 ETH is around $48,000. So to run multiple nodes for a Sybil Attack is not worth it economically.</p>



<p>This is why blockchains that utilize PoW and PoS consensus mechanisms rarely experience Sybil Attacks.</p>



<div id="blog-request-quote-container"></div>



<h2 class="wp-block-heading"><strong>Wrap-up</strong></h2>



<p>A lot of blockchains are susceptible to Sybil Attacks. A successful Sybil Attack cannot only breach privacy but also lead to the loss of huge funds.</p>



<p>This is the reason each blockchain network should prepare against the possibility of Sybil Attacks. Although the existing preventive measures can be difficult to implement, they can mitigate such attacks to a large extent. </p>



<p>Preferably, blockchains should combine two or more of these measures for maximal safety.</p>



<hr class="wp-block-separator has-css-opacity"/>



<h2 class="wp-block-heading"><br><strong>FAQ</strong></h2>


<div class="wp-block-rank-math-faq-block"><div class="rank-math-faq-item"><h3 class="rank-math-question"><strong>Are all blockchains vulnerable to Sybil Attacks?</strong></h3><div class="rank-math-answer">All blockchains are vulnerable to Sybil Attacks. But in reality, most blockchains have set up structures that make Sybil Attacks practically impossible.</div></div><div class="rank-math-faq-item"><h3 class="rank-math-question"><strong>How do you detect a Sybil Attack?</strong></h3><div class="rank-math-answer">You can detect Sybil Attacks with validation models and social trust graphs.</div></div><div class="rank-math-faq-item"><h3 class="rank-math-question"><strong>How does the Bitcoin network prevent Sybil Attacks?</strong></h3><div class="rank-math-answer">The Bitcoin network prevents Sybil Attacks with its costly and highly distributed consensus mechanism called proof-of-work. A threat actor will need a lot of resources and lobbying to attack effectively.</div></div></div>

Sybil Attack in Blockchain: Examples & Prevention

Blockchain Security: Common Vulnerabilities and How to Protect Against Them

Luciano Ciattaglia

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