In Blockchain, Layer3 is the new Layer2

For every successful sequel, there is a subsequent sequel. From razor manufacturers, adding another blade to the shave, to producers commissioning another film for the franchise. So it’s in crypto where Layer2 has replaced Layer1 as the network where you can find memecoins, open shorts on the chain and top up loans with underarms.

But Layer2 faces a threat from a new competitor intent on stealing the thunder. That’s right, Layer3 season is here. This innovation in crypto network design is not about trying to flog new technology or shill nascent networks that are in desperate need of users. Rather, it is about solving a very specific problem that has emerged as blockchain has matured.

What is L3?

To understand Layer3, we should first reexamine what constitutes Layer2. A Layer2 network refers to a secondary protocol built on top of an existing blockchain (ie Layer1). Layer2 solutions are designed to address scalability and efficiency limitations of Layer1 chains, enabling faster and more cost-effective transactions. Ethereum is a layer1; Arbitrum a Layer2.

When we talk about Arbitrum, this is where we can find one of the clearest definitions of what layer3 is. The Orbit framework supports the creation of L3 chains “with minimal trust assumptions, while enabling ultra-low transaction costs for high-volume applications.” These are application-specific chains that are designed to do one thing and to do it reliably. Typically, this means hosting a single application, with the network solely dedicated to serving the needs of those users.

While Arbitrum has L3s such as Arbitrum Nova, which are dedicated to GameFi, other L2s and sidechains have their own implementations of this technology. On Polygon, for example, there are supernet, application-specific chains that are similarly dedicated to a single device and their users. The first implementation of a Supernet in action comes thanks to Polygon NFT game Aavegotchi, which is releasing its own L3 called Gotchichain.

This sudden surge of L3 development suggests that Layer3 is a new development whose architects are clamoring to find uses for their newly minted technology. In reality, the seeds of L3 can be traced further back in blockchain history than you might expect.

Orbs did it first

The origins of Layer3 can be found at Orbs, the crypto infrastructure developer that recently raised $10 million from DWF Labs. As long as two years ago, Orbs first proposed using Layer3 as a scalable network to sit on top of L1 and L2 chains. As Orb’s co-founder Tal Kol explained, “This is a completely new building block for the blockchain, building an extra layer of sophistication into the activity that is performed on the chain.”

He added: “The use extends far beyond the DeFi space, although it is hugely important here as well. We are taking our decentralized protocol, which is open and permissionless, and making it available to developers using smart contracts in the languages ​​they already use . Using this approach increases the complexity of the on-chain actions apps can perform.”

The concept that Orbs pioneered has now begun to gain ground, and Layer3 is no longer a foreign concept to blockchain developers and users. From an adoption perspective, L3 is still at an early stage. The technology is being built out as developers get a feel for its capabilities.

Many of the Layer3 networks coming to fruition in the near future will sit on top of zk chains which are themselves still under construction. When cutting-edge technology is piled upon cutting-edge technology—especially when that technology is used to route billions of dollars in assets—it’s important that nothing breaks.

But as L3s begin to come on stream, a new era of blockchain scalability will begin with virtually unlimited throughput for high-volume dapps. For the first time, developers will be free to create powerful applications that are not limited by considerations such as speed or cost. The average end user neither knows nor cares which layer their transactions are recorded on. But for those tasked with creating and maintaining scalable crypto networks, L3 appears to be the next best thing since L2.