How does Layer 3 solve the blockchain scalability problem?

As blockchain technology advances, people are demanding faster and cheaper transactions. Layer 3 is a new hierarchical solution that has emerged to meet these needs. Built on top of existing Layer 1 and Layer 2, Layer 3 provides more sophisticated scalability. Let’s take a closer look at Layer 3.

Basic Concepts and Operating Principles of Layer 3

Layer 3 is an advanced protocol built on top of Layer 2 solutions. To understand it, we first need to examine the hierarchy of blockchain.

Layer 1(Layer 1) refers to the fundamental blockchains like Bitcoin and Ethereum, which serve as the base where transactions are finalized and security is guaranteed. However, since all transactions must be processed directly, they tend to be slow and costly.

To address this, Layer 2(Layer 2) solutions have been introduced. Solutions like Arbitrum, Polygon, and zkSync process many transactions off-chain and only record the results on Layer 1. This approach increases speed and reduces costs.

Built on top of these, Layer 3 allows developers to create custom blockchains tailored to specific application needs. For example, a gaming project can build an optimized Layer 3 network for gaming, while DeFi protocols can create environments specialized for financial transactions.

Key Problems Solved by Layer 3

Maximized Scalability

Layer 3 significantly enhances scalability beyond the limits of Layer 1 and Layer 2. It can handle larger volumes of transactions more quickly, enabling smooth operation of complex decentralized applications.

Application Customization

One of the most notable features is that developers can configure the network according to their requirements. For instance, in Arbitrum Orbit, developers can freely choose the tokens used for transaction fees. They can also stabilize gas prices, add privacy features, or customize governance mechanisms.

Interoperability Between Blockchains

Layer 3 acts as a bridge connecting different blockchain networks. This allows users to freely transfer assets between Ethereum, Solana, and other blockchains.

Drastically Reduced Costs

Off-chain processing reduces network congestion and transaction fees, lowering entry barriers. This creates a more accessible environment for both developers and users.

Easy Deployment and Accessibility

Layer 3 networks can be built and deployed without approval procedures. In contrast, launching Layer 2 requires detailed proposals regarding trust models and decentralization. This makes Layer 3 a much more accessible solution.

Applications of Layer 3 in Gaming and DeFi

New Opportunities in Gaming Projects

Blockchain games need to process thousands of transactions per second. Gaming networks built on Layer 3 can meet these demands while optimizing user experience with low fees.

For example, Xai Network is built on Arbitrum’s Layer 3, introducing parallel processing capabilities to achieve both efficiency and scalability. This allows game developers to provide users with smooth and responsive gaming experiences.

New Frontiers in Decentralized Finance

DeFi applications are also major beneficiaries of Layer 3. Developers can customize privacy settings and various application features to suit their needs. With excellent scalability, they can process real-time transactions swiftly, and interoperability across multiple blockchains enables users to move assets flexibly across different networks.

Notable Layer 3 Projects

Here are some Layer 3 projects currently attracting attention in the cryptocurrency ecosystem.

Orbs: Decentralized Serverless Computing

Orbs operates on top of existing Layer 1 and Layer 2 protocols, focusing on solving Ethereum’s scalability issues. Developers can create and deploy smart contracts on their own distributed networks without managing physical servers. It currently integrates with various Layer 1 and Layer 2 protocols such as Ethereum, BNB Chain, Avalanche, and Polygon.

Arbitrum Orbit: Fully Customizable Blockchain

In 2023, the Arbitrum Foundation launched new Layer 3 features based on Arbitrum Nitro. Developers can create their own managed private blockchains, reducing transaction costs and improving scalability. They can also fully customize features to meet specific requirements, including privacy, permissions, fee tokens, and governance.

zkSync Hyperchains: Unified Security Framework

zkSync Hyperchains, introduced by the zkSync team, run on the same zkEVM engine of ZK Stack. All ZKP circuits maintain a consistent design regardless of who deploys them, inheriting Layer 1 security. Messaging between Layer 3s settled on the same Layer 2 becomes faster, and interoperability within a broader ecosystem is enhanced, which is a significant advantage.

The Evolution of the Blockchain Ecosystem

The development of Layer 3 marks an exciting turning point in the cryptocurrency industry. Combining the security of Layer 1 with the scalability of Layer 2, Layer 3 elevates network performance to a new level.

It’s important to note that each layer is not in competition but complementary. Layer 1 provides security foundations, Layer 2 handles general scalability, and Layer 3 offers optimized environments for specialized applications.

While Layer 3 is still in its early stages, it is expected to play a crucial role in shaping the future where blockchain technology can efficiently handle high transaction volumes. From gaming to finance and undiscovered new applications, Layer 3 will open up endless possibilities.