Layer 3 Blockchain

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13 Jan 2024

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As we know Blockchain technology is a revolutionary technology in the internet world today, Blockchain consists of various layers such as,

-Layer 1, Layer 1 is a Blockchain that is often used by current Web 3 users, many projects are built on Layer 1 Blockchain including Ethereum, Solana, BNB and others.
-Layer 2, Layer 2 for now is still considered an alternative to Layer 1 blockchain which is usually used to avoid high gas fees, especially Layer 2 Ethereum and Layer 2 projects include Optimism, Arbitrum, Zksync and many more.

but did you know there are other blockchains besides the two types of blockchain above, namely Layer 3 and Layer 0. this time I will briefly discuss what is Layer 3.

Layer 3

Blockchain is the underlying technology that powers crypto and is the foundation of the entire ecosystem. It is a decentralized digital ledger that records all crypto transactions that have ever taken place. Meanwhile, layer 3 refers to the layers built on top of the base blockchain that are where further innovations and applications develop. This means that blockchain is not only a tool for transferring value, but also the basis for a wide variety of solutions that can transform various aspects of our lives.

From the source indodax.com, Basically, layer 3 which is also known as the "Application Layer" or "Smart Contract Layer" is the stage above the basic blockchain that allows the development of more complex and well-programmed applications and protocols. One of the core components of Layer 3 is smart contracts, which is computer code that is executed automatically when conditions specified in the contract are met. In addition, layer 3 is also the basis for the development of DApps, which are decentralized applications that run on top of the blockchain.

Keep in mind, the Decentralized Finance (DeFi) ecosystem mainly operates at Layer 3. Then, NFTs (Non-Fungible Tokens) that represent unique ownership of digital assets, also reside at Layer 3. layer 3 focuses on interoperability between various blockchains. This means allowing different blockchains, which may use different technologies (e.g., Ethereum, Binance Smart Chain, Polkadot, etc.), to communicate and interact with each other. In comparison, it is important to understand that layer 1 is the underlying blockchain that provides basic crypto transaction services with a focus on security, decentralization, and consensus. but layer 3 is the application layer that enables the development of more complex crypto applications.

Layer 1 focuses on basic value transfer, while layer 3 enables the development of a wide array of crypto applications, such as smart contracts, DApps, DeFi, and NFTs, Layer 1 is also simpler in its functionality, while layer 3 has a much higher level of complexity as it deals with sophisticated application programming. Major innovations in the blockchain ecosystem often occur at Layer 3, with developers creating new applications and protocols that harness the power of blockchain. Layer 3 relies on Layer 1 for basic security and consensus. In this sense, layer 1 provides the foundation for all transactions that occur at layer 3.

How Layer 3 Works

The way layer 3 works cannot be as simple as creating a new network on top of a layer 2 network. In a related essay on layer 3, Vitalik Buterin wrote that there are limitations in "piling" new networks on top of existing networks. That might work for a layer 2 network built on top of a layer 1 network, but it wouldn't work for a layer 3 network built on top of a layer 2 network.

For example, rollup technology uses compression technology where various data is collected and "rolled" into one. However, the compressed data cannot be merged and compressed again so rollups on top of rollups is something that cannot happen. However, creating a network above layer 2 with a specific purpose and aligned with each specialization is something that can happen.

By taking the layer 2 network as a base, layer 3 does not need to build its own validator system. In this case, it can use layer 2's validator network and utilize the security aspects of the protocols used, both rollup and zero-knowledge. This is currently being done by one of the companies that focus on developing layer 3 solutions, Starkware. Keep in mind, layer 2 is used as a general-purpose scaling solution, but layer 3 has specific functionality. Layer 3 can have functions that are prioritized for privacy, specific application performance, or other purposes that are aligned with developer needs.

Layer 3 Pros

1. Scalability
Through multiple chains that are each dedicated and have separate resources, it makes it easier to overcome bottleneck issues from layer 2.

2. Privacy and Security
Layer 3 also allows developers to implement an additional privacy layer on top of the base blockchain (Layer 1). This means that applications built on Layer 3 can provide a better level of privacy for users.

3. Customization
Layer 3 is known to provide greater flexibility in designing crypto applications. Developers can create highly customized smart contracts and dApps according to their needs or the needs of users.

4. Interoperability
One of the main advantages of Layer 3 lies in its ability to improve interoperability between different blockchains. It allows assets and data to move more freely between different blockchain networks, creating a more connected ecosystem.

Existing projects in Layer 3

1. ZK Stack
Through ZK Stack, the Matter Labs company is currently known to be developing a layer 3 concept. This project is a modular framework for creating an independent Zero Knowledge-based Hyperchain (layer 3). The ZK Stack is designed based on the open-source code from the zkSync Era layer 2 network. ZK Stack will also provide freedom in choosing the data availability mode for developers, both from native tokens and decentralized sequencers.

2. Arbitrum Orbit
Being part of Arbitrum, Arbitrum Orbit allows developers to launch their own layer 3 ecosystem easily and does not require certain permissions. The Arbitrum Orbit chain can be created on Arbitrum's layer 2 network, Arbitrum One or Arbitrum Nova. It is important to remember that layer 3 has characteristics that can be customized according to the developer's needs. Arbitrum Orbit also offers chains that can be designed in line with developers' specific needs. To accommodate further network modifications, Arbitrum will even launch Stylus soon. This update will allow developers to use non-EVM programming languages, such as Rust and C++.