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What are Layer 3 Networks? Improving Functionality and Interoperability

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Blockchain infrastructure has developed to include layer 1 and layer 2 networks. A newer improvement is the emergence of so-called “layer 3” networks.

So what are layer 3 networks, and the way do they differ from layer 1 and layer 2 networks?

What’s a layer 3?

To know what layer 3 networks are, we first want to take a look at the layer 1 and layer 2 networks that they sit atop.

Layer 1 networks are the bottom layer of blockchain infrastructure, and embrace blockchains corresponding to Ethereum or Bitcoin. They supply the underlying framework for a blockchain community, validating transactions and reaching consensus.

Nevertheless, layer 1 networks can face scalability bottlenecks attributable to throughput and transaction prices.

That’s the place layer 2 networks like Arbitrum, Optimism, and Blast are available. They’re networks that reside on prime of the layer 1 blockchain and deploy quite a lot of scaling options to assist enhance their effectivity. These can embrace bundling transactions or processing transactions off-chain.

Layer 3 networks are one of many newest developments within the blockchain area, constructing atop the established infrastructure of layer 1 and layer 2 blockchains.

Their main perform is to host decentralized purposes (dapps) in order that they will carry out at optimum ranges with out affected by the community congestion of the layers beneath it.

Layer 3s additionally concentrate on scalability and effectivity, just like the layer 2s they’re constructed on prime of—however layer 3s achieve this so as to promote interoperability, and to enhance the efficiency of complicated dapps.

Layer 2s vs layer 3s

Layer 2s (also called rollups) have been first launched as a blockchain layer on prime of the layer 1 Ethereum community. They have been meant to handle the scalability points discovered on Ethereum, and for probably the most half, they’ve completed a reasonably first rate job at it.

The place layer 2s targeted on enhancing the scalability and effectivity of the chain they have been constructed on prime of, layer 3s are meant to handle points in user-friendliness, effectivity and performance, and usually concentrate on dapps as their main use case.

The meant perform of a layer 3 community is to enhance the scalability and effectivity of decentralized purposes (dapps) constructed on prime of it. They usually solely home one dapp, enabling it to carry out at excessive speeds, with out the congestion discovered on layer 1 and layer 2 networks.

For builders, layer 3s are an atmosphere wherein they will create rather more superior dapps, utilizing complicated sensible contracts that may not be possible on layer 1 or 2 networks on account of scalability and value restrictions. They may also be personalized for particular software use instances in ways in which layer 2s can’t—as a result of they don’t have the identical constraints.

Layer 3s aren’t unique to Ethereum; different layer 1 networks corresponding to Cosmos and its IBC protocol additionally present options for creating layer 3s.

Examples of layer 3 networks

For those who’ve spent any time on crypto social community Farcaster, you’re most likely acquainted with DEGEN and Degen Chain. Initially a channel on Farcaster, the Degen neighborhood launched a token on layer 2 community Base referred to as DEGEN, primarily used to tip folks on Farcaster. The token shortly grew, and shortly after, the pseudo-anonymous workforce launched its personal L3, Degen Chain.

Degen Chain was constructed utilizing Arbitrum’s Orbit layer 3 structure, however was launched on prime of the Coinbase-incubated Ethereum layer 2 community Base. Its goal is to function an extremely low price atmosphere for degens and builders alike to create enjoyable and user-focused purposes, based on hypothesis.

One other fashionable layer 3 is Xai—an Arbitrum layer 3 designed for gaming purposes, providing diminished charges and a degree of account abstraction not accessible on Layer 2s.

Account abstraction is essential in the case of consumer-facing dapps like video video games, so as to easy the onboarding course of for mainstream customers and take away the sophisticated sequence of steps that blockchain-based merchandise usually entail.

Xai retains the core performance of Arbitrum’s Layer 2, however makes use of optimistic rollups to deal with transactions—making it cheaper and sooner than the layer it’s constructed atop.

The way forward for layer 3 networks

As layer 2s proceed to develop and develop in rely, the demand for extra refined and scalable options is about to develop alongside them. Layer 3s create a extra versatile infrastructure for dapps, permitting for options like privateness, consumer friendliness (through account abstraction), and interoperability throughout layers.

On the subject of gaming, account abstraction is essential. Advanced dapps like video video games want a extra versatile atmosphere to succeed—one which retains core parts of Web3’s decentralized ethos (corresponding to gamers proudly owning their very own in-game gadgets), but additionally gives the extra performance that’s wanted for dapps to go from “area of interest crypto merchandise” to “mainstream.”

Equally, with reference to privateness, complicated cryptographic methods wanted to create on-chain privateness change into rather more possible and value efficient to implement.

Providing real enhancements for dapps and the builders making an attempt to construct on layer 1 and layer 2 networks, layer 3s are more likely to proliferate over the approaching years alongside layer 2s, as builders begin constructing extra complicated merchandise that transcend the present limitations of layer 1 blockchain rails.

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