Would Layer 3 Solutions Encourage the Growth of Ethereum?

Ethereum faced several issues with scalability, so a congested network was common back in the day, at least before the switch to PoS. The sudden massive number of transactions occurred due to the expanding Ethereum ecosystem that included DeFi applications and dApps, whose popularity surged suddenly at some point.

That’s why various scaling solutions were implemented in time to counteract the effect on the blockchain and the current Ethereum price. Layer 1 and layer 2 blockchain methods became necessary for Ethereum, but other blockchains included them, too, since the cryptocurrency market was increasing.

But, it seems like both scaling solutions are still not enough to tame Ethereum’s popularity and competition, so discussions about layer 3 solutions have already started with Vitalik Buterin. Although he seemed to criticize the solution, it might actually provide better cost-saving solutions and features for the crypto community. Here’s how.

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Photo by Shubham Dhage on Unsplash

What’s the Layer 1 Scaling Solution?

The first layer of a blockchain is the most important as it’s the base for the decentralization feature. Bitcoin, Ethereum and Cardano leverage this type of scaling, and they handle their security measures through PoW or PoS consensus mechanism.

Scaling these types of blockchains can be done in several ways, such as the following:

What About Layer 2?

Layer 2 scaling solutions are created on top of layer 1 to enhance its features. These protocols use the first layer for security but leverage unique scaling methods that make it less complex to manage networks. Polygon and Bitcoin’s Lighting Network are examples of such layers.

Layer 2 solutions can be scaled through:

So, What’s the Deal with Layer 3?

Layer 3 would be built on top of layer 2 solutions and improve scalability and interoperability. Some believe that layer 3 can ensure top-notch solutions for blockchains, such as cross-chain interoperability and microtransactions for high volumes of transactions, as well as complex smart contract features.

Many investors, including the blockchain’s creator, are skeptical about Ethereum's need to introduce layer 3 solutions since it might threaten a network’s security. Buterin claims that the layer 3 solutions would instead provide more customization on the network and reduce certain costs, but nothing fancy. Instead, he argued that there are many other ways to save costs and improve a blockchain without layer 3.

There are indeed problems with layer 1 and layer 2 blockchain scaling solutions since they might be harder to verify due to the need for movement off-chain. At the same time, updating the blockchains for scalability purposes requires forking, which may power up two networks at the same time, affecting prices and productivity.

Still, Layer 3 Solutions Have a Massive Potential

Although they might not be suitable for Ethereum at the moment, especially since the network is undergoing several updates, layer 3 has the potential of strengthening security and productivity in:

Arbitrum Orbit and ZkSync Hyperchains as Layer 3 Examples

Arbitrum Orbit is a feature of the Arbitrum Foundation that acts as a layer 3 blockchain, providing low transaction costs and improved scalability through developers’ input in managing specialized blockchains. The product allows developers to put their imagination to work and customize blockchains according to their needs and preferences. Currently, there are numerous exciting projects based on the Arbitrum Orbit, such as XAI Games, a gaming permissionless network that scales itself continuously.

On the other hand, zkSync Hyperchains was created as a layer 2 solution but has the potential to be used as layer 3 due to its rollup technology that allows unlimited computation in any block. The system employs cheap storage and considerable throughput.

Unfortunately, layer 3 solutions are not that easy to adopt since they’re still new to the market and must mitigate many of their challenges. Some consider that leveraging layer 2 solutions will increase computational resources and increase the concentration of power on bigger platforms, directly impacting decentralization and censorship resistance.

At the same time, companies using layer 3 solutions must consider the specific content of use when placing it above layer 2 technology because compatibility is also essential when assessing such scaling solutions.

What’s Your Take on Layer 3 Scaling Solutions?

Layer 3 scaling solutions are still scarce and less popular than layer 1 and layer 2. Still, they’re slowly getting integrated into the network circuit as they can solve many current problems with scalability. Layer 3 technology can provide complex solutions to challenging problems, which is why implementation is rare at the moment, and the general opinion is of skepticism. Indeed, new technology must be tackled with attention and reassurance because putting another layer on top of the first two might increase computational costs.