While the concept of a Layer 3 blockchain network has been around for a few years, with its promise to introduce unparalleled scalability, efficiency and customization to struggling networks and the dApps they support, the hype has begun to generate serious momentum this year.
Whether it’s Arbitrum’s new Orbit program, O.G. L3 protocol Orbs or ZkSync’s EMV-compatible L3 prototype Hyperchains, novel blockchain architectures are emerging at an impressive speed, vowing to lighten the load on legacy L1 and L2 mainnets.
Why Layer 3?
Although the blockchain tech stack risks resembling lasagne, the promise of Layer 3 tech is that endless additional layers mightn’t actually be necessary: L3 architecture dedicated to decentralized apps enables such applications to operate independently, with their own rules and governance mechanisms, and to interoperate with other services. With such universal appeal, it’s little wonder L3 solutions building atop Layer 2s are gaining increased interest.
Layer 3 networks offer many advantages to dApp developers, users and the blockchains to which they are bolted. Perhaps most importantly they improve scalability and efficiency, allowing for more transactions and interactions to be processed without overburdening the network. Operating as specialized networks, they also promote dApp independence, enabling developers to create applications that are not bound by the limitations of the underlying blockchain layers.
Customization is another notable benefit, as seen with the newly-launched Arbitrum Orbit, where developers can tailor aspects like transaction fee tokens and gas prices. Additionally, L3s enhances privacy and security by isolating each app on its own network. Moreover, devs can deploy updates to dApps more expeditiously, ensuring they remain responsive to user needs.
Ground Zero for Layer 3
The concept of a Layer 3 chain came to the fore in late 2021, with Orbs’ proposition to leverage the security of Layer 1 chains and the scalability layer of L2, while simultaneously utilizing its own smart contract deployment layer to supercharge EVM-compatible smart contracts.
The L3 infrastructure network has since positioned itself as a leader in this space. Developers using its decentralized execution layer, which operates between established L1 and L2s and the app layer, can deploy smart contracts without fretting about the network’s underlying infrastructure. The convenience extends to not having to maintain physical servers either, significantly reducing their operational burden. Moreover, Orbs is compatible with a slew of popular protocols such as Ethereum, BNB Chain, Avalanche and Polygon, making it a versatile and powerful tool for blockchain development.
Orbs has continued to innovate since launching two years ago, which is just as well since rival L3s like those mentioned above have come online. Earlier this year, it joined forces with Axelar Network to provide its community with an advanced bridge for ORBS tokens, facilitating reliable asset transfers to major blockchains like Ethereum and BNB Chain. It also launched Liquidity Hub in collaboration with QuickSwap, which offers aggregated liquidity to any DEX-AMM. By combining on-chain smart contracts with off-chain logic powered by Orbs’ decentralized L3 nodes, Liquidity Hubs represents an interesting use-case of L3 technology in a DeFi context.
Perhaps unsurprisingly, Orbs’ native token was the subject of speculative interest in October after being listed on a dozen different exchanges including tier-1s like OXK, BitMEX, and Bybit. Following these listings, the price of ORBS surged to $0.06, its highest level since June 2022. At the time of writing, ORBS has a market cap of $160.5 million, with a daily (24hr) trading volume of just over $90m.
Whatever way you look at it, Layer 3 tech offers meaningful solutions to longstanding issues of scalability, efficiency and customization on legacy networks. In addition to empowering developers to create high-performance dApps, the L3 revolution has inspired other scaling innovations such as the Rollup-based OP Stacks, a so-called superchain that can be used to spin up L2s with a single click. When the next bull market arrives in earnest, blockchain builders and their users are the ones who stand to benefit from the maturation of these unique solutions.