Protocol Integration

Blockchains are organized into three distinct layers, each with specific responsibilities:

1. Application Layer: Where smart contracts and user applications run
2. Execution Layer: Where the EVM processes transactions and executes code
3. Consensus Layer: Where validators agree on the blockchain state

Precompiles live in the Execution Layer, directly integrated into the EVM itself:

Why Aren't Precompiles in the Application Layer?

You might wonder: if precompiles can be called like smart contracts, why aren't they stored with other smart contracts in the application layer?

The answer comes down to performance and access:

1. Direct State Access
Smart contracts in the application layer must go through the EVM interpreter to access blockchain state. Precompiles, living in the execution layer, have direct access to the EVM state—they can read and modify balances, storage, and consensus data without the overhead of bytecode interpretation.

2. Native Code Execution
Application layer contracts are compiled to EVM bytecode and executed opcode-by-opcode. Precompiles are written in Go (Avalanche's client language) and execute as native code, making them orders of magnitude faster for complex operations.

3. Protocol-Level Operations
Precompiles need to perform operations that regular smart contracts cannot or should not do—like minting native tokens, configuring transaction fees, or managing validator permissions. These are protocol-level concerns that require execution layer access.

4. Security Boundaries
By keeping precompiles in the execution layer, we maintain a clear security boundary. User-deployed contracts can't interfere with protocol operations, and protocol operations benefit from the stability and security of the client software itself.

This architectural separation is what makes stateful precompiles so powerful: they bridge the gap between user applications and the blockchain protocol, enabling customizations that would be impossible in the application layer alone.