Blockchain & Cryptocurrency Glossary

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Layer 3

1 min read
Pronunciation
[ley-er three]
Analogy
If Layer 1 is the main highway system and Layer 2s are various express toll roads and high-speed rail lines, then Layer 3s are like specialized applications or services that use these transport networks. For example, a specific travel booking app that aggregates routes across different rail lines (L2s) and highway options (L1), or a dedicated logistics network for a particular type of cargo that operates using the existing transport layers.
Definition
A tertiary layer or protocol built on top of Layer 2 solutions or directly on Layer 1, often focused on application-specific functionalities, interoperability, or enhanced user experiences. Layer 3s aim to provide more specialized services or connect disparate Layer 2 ecosystems.
Key Points Intro
Layer 3s provide application-specific or interoperability-focused solutions on top of existing blockchain infrastructure.
Key Points

Built on top of Layer 2s or Layer 1s.

Often focus on specific use cases like DeFi, gaming, NFTs, or identity.

Can provide interoperability solutions between different L2s or L1s.

May offer further abstraction and simplification for end-users and developers.

The definition and scope of L3s are still evolving.

Example
An example could be a protocol that facilitates cross-L2 ZK-Rollup communication, or a highly specialized DeFi protocol that aggregates liquidity and functions across multiple L2s, effectively operating as an application-specific layer above them. Some might also consider application-specific blockchains (AppChains) that settle to an L2 or L1 as a form of L3.
Technical Deep Dive
Layer 3s are less about fundamental scaling of raw transaction throughput (which L2s address) and more about usability, developer experience, and creating richer application ecosystems. They might involve standardized APIs for interacting with multiple underlying layers, specific state management for complex applications, or protocols for cross-domain communication and asset transfers. The distinction between a complex dApp, a platform, and an L3 can sometimes be blurry.
Caveat
The concept of 'Layer 3' is still somewhat nascent and less uniformly defined than Layer 1 or Layer 2. Its meaning can vary depending on the context and the specific architecture being discussed. Some argue many things termed L3 are simply applications or middleware.
Related Terms
L3
Layer 2
Layer 1
Application-Specific Blockchain
DeFi

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