The layer 3 blockchain is essentially special ways to enable cross-chain functionality across various blockchain systems. Real compatibility would be the main goal of layer 3 solutions, which would be accomplished without middlemen or guardians. The concentration on parallels with the tiered architecture of the internet is one of the intriguing features of layer 3 solutions.
The application layer, or Layer 3, is frequently used. DApps and the interfaces that make the applications possible are hosted by this layer. While others, like Ethereum or Solana (SOL), have a robust ecosystem of layer 3 apps.
As a result, layer 2 solutions deviate from Bitcoin’s present core network the most. Some initiatives attempt to split the core BTC system to include DApp capabilities in the BTC environment. Layer-three solutions achieve connectivity and strengthen independent blockchains with cross-chain abilities.
It’s important to emphasize at this stage that the existing network is independent of any custodian or middleman.
Developing interoperable protocols on a distinct layer makes sense since L2 and L1 solutions are tightly connected. L3 services were developed as a result of this insight.
Consider L3 protocols as a means to streamline all the levels without adding unnecessary complexity to the situation. They communicate between L1 and L2 systems while ignoring most of their operational differences.
Layer 3 blockchain solves Interoperability issues
While guaranteeing that the operations in the lower levels are simple, Layer 3 seeks to solve the interoperability challenge. In order to serve consumers in various ecosystems, Layer 3 focuses on the abstraction of several variables, including technology, functions, and features. By abstracting such distinctions, layer 3 or L3 protocols enable communication, connection, and interaction between various networks and environments.
A description of each Layer 3 protocol type would explain how it functions to address interface problems. They provide packetized data delivery by operating similarly to the web’s internet protocol.
The benefits of layer 3 solutions emphasize routing value signals across numerous DLT systems and measuring value in packets. In light of this, layer 3 protocols can provide efficient communication between layer 1 and layer 2 chains and the related apps and services included there.
Why Do We Need a Layer 3 For Blockchain ?
Anyone’s first concern with layer 3 solutions for blockchain would be whether or not they were necessary. Anyone familiar with blockchain technology must be aware of the blockchain trilemma. The problem throws three crucial characteristics against one another, and blockchain systems frequently get caught deciding which trait to overlook.
Interestingly, the trilemma was the starting point for the development of blockchain layers, suggesting that just two of the three requirements could be met by blockchain networks.
The blockchain trilemma has three components:
- Decentralization
- Safety
- Sustainability
Almost all blockchain projects have to give up one of the three characteristics to improve the performance of the other two. The trade-offs may be seen in well-known instances like Ethereum and Solana. While Solana concentrates more on safety and peace, Ethereum and Bitcoin are more concerned with security and decentralization. The sustainability trilemma poses a challenging problem for layer 1 blockchain integration of the three components. In order to provide scalability, safety, and decentralization, a multi-layer structure can offer an efficient and affordable option. It is crucial to consider if layer 3 protocols are necessary when layer 2 protocols are available.
- Compatibility with blockchain
The fundamental justifications for introducing the multi-level design in blockchain systems present the ideal response to scalability problems. Scalability issues can be resolved via layer 2 blockchain technology. So why are layer 3 blockchain initiatives needed? The blockchain trilemma is not the only basic problem facing players in the cryptocurrency market.
Additionally, layer 2 solutions fall short in addressing interface problems. Layer 2 methods did not support information viewing, access, and exchange between various computer systems. Cross-chain capability is another name for compatibility in the blockchain industry.
It suggests that two distinct blockchain systems with their communities might interact and conduct transactions without centralized middlemen. For instance, it is very hard to utilize Bitcoin across various DeFi applications and shift it to the Ethereum network.
Most DeFi and dApp systems that allow for flexible crypto trading include some centralized management. When considering well-known DeFi apps, the need for layer 3 blockchain technologies becomes clear. Aave, a lending protocol, and Serum, a decentralized exchange, operate on many blockchain systems.
As a result, using the services offered by these sites is almost unattainable for everyone. Consequently, the main justification for the introduction of layer 3 solutions is the lack of compatibility among blockchain systems.
Layer 3 Connectivity Examples
The samples of layer 3 solutions would undoubtedly be the most crucial aspect of any debate. For making links between various blockchain systems and layer 2 services or protocols, several new level 3 initiatives have been developing standards. Here is a summary of some of the best layer 3 blockchain application examples you should follow.
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Protocol for Interpledge
In the existing economy, the Interpledge. The interface of Ripple is essentially the most well-liked layer 3 option. Ripple is a multi-layer design with three levels, each serving a different functional purpose. Local area networks, or LANs, are included in layer 2, whereas layer 1 serves as the blockchain ledger.
The layer 3 technology of Ripple, called Interpledge Interface, seeks to deliver cheaper and quicker transactions on the Ripple blockchain on top of it. The Ripple Interpledge Network, one of the most well-known layers 3 blockchain technologies, provides an effective means of integrating interconnection in the blockchain ecosystem. You can see how the Internet Layer, IP, and ILP both do the same job.
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Protocol IBC
Another intriguing example of employing blockchain levels in the construction of future blockchain projects is the IBC
system, also known as the Inter-Blockchain Communication System of Cosmos. The three-layer structure of Cosmos is also present, as can be seen by looking more closely at it.
The layer 1 protocol is the Tender mint Core, while the Cosmos-SDK supports the layer 2 network functions. Any program may benefit from dependable and secure inter-module interaction thanks to the IBC interface. Additionally, the IBC protocol enables cross-chain asset transfers and multi-chain smart contracts, both of which have advantages.
IBC, one of the best layer 3 technologies, enables a trustworthy and secure module for interconnection across blockchain networks. Across numerous blockchain systems, it facilitates several activities, including data transmission, identification, and scheduling.
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ICON
One illustration of a distinct layer 3 protocol type that functions as a stand-alone answer is an ICON. The strongest points for ICON as a layer 3 protocol point to its collaborations with Samsung and the Seoul authorities. The interconnection protocol connects several blockchain networks by compiling all blockchain data into a single layer. ICON offers a solid option to provide a single united gathering of many blockchain systems.
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Quant
Quant would be the next well-known example among layer 3 blockchain technologies. Quant facilitated the connection of public and private chains and was created as an effective option for business blockchain networks.
Quant uses a variety of innovative technologies for connectivity, including the Over ledger DLT gateway. Quant offers several noteworthy features, such as multi-ledger coins and multi-DLT smart contracts.
The layer 3 protocol has partnered with well-known companies, including Oracle, Hyperedge, and Nvidia. The layer 3 protocol cases demonstrate their importance for the development of the blockchain industry. Detonation difficulties in crypto can be solved by combining layer 2 scaling techniques with L3 interoperable technologies.
Applications of Layer 3 Blockchain
For instance, Cake DeFi is a DeFi programmed that provides BTC coin owners with services like staking, lending, and stability mining. Cake DeFi is built on the DeFi Chain fork of the Bitcoin protocol. Although DeFi Chain keeps “an anchor” to the main Bitcoin chain for certain activities, it is nevertheless considered a distinct blockchain in its own right.
In the opinion of some industry watchers, one of the main restrictions on BTC is the absence of DApp capabilities. The value and ubiquity of layer 3 systems have increased significantly since the introduction of Ethereum in 2015. Presently, there are about 3,000 layers 3 apps on Ethereum. By now, the blockchain-based DeFi apps have a combined market cap of $185 billion.
Over 500 layer 3 Decentralized applications are hosted by Solana, one of the top blockchains, and the platform’s DeFi applications have a combined worth of close to $15 billion. In contrast, BTC lacks a working application that may be classified as a layer 3 application. The value of efforts intended to “force in” DApp capabilities onto BTC is a current discussion topic. Some in the sector contend that BTC will still be a network made for cryptocurrency fund transactions rather than Decentralized applications.
These people draw attention to the fact that the layer 1 BTC chain has a sector market value (of $1.3 trillion as of this writing), which surpasses the TVL and marketplace cap totals of all active layer 3 projects put together. Therefore, layer 3 capabilities may not be necessary for Bitcoin concerning financial data.
Related Terms
Decentralized application blockchain (dApp)
A shared open source software program known as a “decentralized application” (dApp) operates on a peer-to-peer (P2P) blockchain system as opposed to a single machine.More
