Layer-3 Blockchains: The Complete Guide

Layer-3 Blockchains Are Built On Top of Layer-2s, Usually For Specific dApps 

Layer-3 blockchains are blockchains built on top of Layer-2 chains, often for a specific decentralized application (dApp). Layer-3s can provide certain benefits to developers and users, such as lower gas fees, higher transaction speeds, and more customizability. However, they also have certain drawbacks, as they inherit both the Layer-1s and Layer-2s underlying security, potentially making them less secure than L1 and L2 chains. 

Layer 1 vs. Layer 2 vs. Layer 3 Blockchains

Below, we describe some of the differences between L1, L2, and L3 blockchains: 

• Layer-1 Blockchains: These are the basic layer of a blockchain network. Popular L1 blockchains include Ethereum and Solana. 
• Layer-2 Blockchains: Built on top of Layer-1 chains, L2 chains inherit the security guarantees of the L1 and process batched transactions through them. They are typically designed to have more scalability, lower transaction fees, and faster transaction times than L1s. Most L2s, like the popular blockchains Polygon (which is really a sidechain), Optimism, and Arbitrum, are built on top of Ethereum. However, an increasing number of L2s are built on top of other popular chains, like Solana (such as Zeta and Code). 
• Layer-3 Blockchains: As previously mentioned, Layer-3 blockchains are built on top of L2 blockchains and are generally designed to host a single dApp. Layer-3s are typically intended to have even more scalability, faster transaction times, and lower gas fees than Layer-2s. They can also be customized significantly for the needs of a specific development team or dApp. 

Uses for Layer-3 Blockchains 

Below, we’ll mention a few current and potential uses for Layer-3 blockchains, including: 

• Decentralized Exchanges (DEXs): DEXs, particularly those trading more exotic assets like futures and derivatives, often need extremely fast transaction times and low transaction fees to suit the needs of traders. This need, which can often be addressed with Layer-3 chains, has only increased with the growing popularity of high-frequency and algorithmic trading, as traders may want to execute hundreds (or even thousands) of transactions per second. 
• GameFi: GameFi applications built on top of Layer-1 (and even Layer-2) blockchains (such as Axie Infinity–especially before it transitioned to the Ronin sidechain and Decentraland) have faced severe infrastructure issues, including lagging, freezing, and prolonged transaction times. This has turned away many prospective players from decentralized gaming, slowing growth in the industry. Layer-3s provide high scalability and infrastructure customization that can support more advanced graphics and better gameplay speeds, making things easier for developers and significantly improving the gameplay experience. 
• Real-World Assets (RWAs): The trading and ownership of real-world assets, like tokenized gold, has also been potentially hindered by the slow transaction speeds and higher gas speeds of L1s and L2s, making L3s an ideal solution in many scenarios. 
• Blockchain Storage: Storing lots of data on-chain has been a significant challenge for L1 and L2 networks, even with the creation of solutions like the Interplanetary File System (IFPS). In the future, L3s, with their high degree of available customization, may be the perfect solution for securely storing data on-chain and could potentially have enterprise applications, as blockchain data storage could help prevent the growing number of data breaches worldwide. 
• Stablecoins: Stablecoins provide essential liquidity to the global crypto market and have helped provide digital banking services for unbanked individuals (particularly in developing countries) and allow for low-cost foreign remittances, as traditional remittance transfer services often charge exorbitant fees. Stablecoins like Reserve have also been used to hedge against inflation in high-inflation countries like Argentina and Venezuela. As with the other applications mentioned, slow transaction times and high gas fees on L2s and L2s reduce stablecoin-related services’ efficiency, effectiveness, and popularity, making L3s a potentially ideal solution. 

The Main Benefits of Layer-3 Blockchains 

A few of the core benefits of Layer-3 blockchains include: 

• Customizable Governance: While the degree of customizability can vary depending on the L1 and L2 chain an L3 is built on, many L3 chains permit more governance customizability when compared to L1 and L2 chains. 
• Privacy: In some scenarios, L3 chains can provide devs additional options when it comes to privacy, and this can be important for many users.
• Adjustable Tokenomics: Many L3 networks provide developers with more flexibility when issuing tokens, which can help with various aspects, including staking, vesting, and other essential elements of tokenomics. 
• Additional Interoperability: Some L3 chain development networks, like Orbs, can be built on top of more than an L1 or L2 chain, giving developers additional options when it comes to interoperability. 

Key Examples of Layer-3 Blockchains 

Below, we’ll discuss some of the most popular Layer-3 blockchains on the market today.

Arbitrum Orbit

Arbitrum is one of the most popular Layer-2 blockchains for dApp development. Launched in 2023 by the Arbitrum Foundation, which governs the core Arbitrum L2 blockchain, Arbitrum Orbit is a relatively new product that lets devs create customizable L2 or L3 blockchains. Arbitrum Orbit allows developers to make chains with better scalability and lower transaction costs than the core Arbitrum blockchain. 

Orbs 

Orbs is a multi-chain protocol that allows developers to create Layer-3 chains on top of several popular L1 blockchains, like Ethereum, Avalanche, and BNB Chain, as well as on top of L2s and sidechains like Polygon. Specifically, Orbs permits devs to create smart contracts by operating as a decentralized severless cloud. Orbs can be utilized for many purposes, but the protocol was first intended to allow L3s designed for advanced on-chain trading. The Orbs network is open and decentralized and is governed by a public network of permissionless validators using Proof-of-Stake (PoS) consensus.

zkSync Hyperchains

ZkSync Hyperchains are yet another form of Layer-3 blockchains. ZkSync Hyperchains were developed by ZkSync, an Ethereum scalability solution that utilizes ZK-Rollups (a type of cryptographic proof) to send batched transactions to the core Ethereum blockchain to improve speed and scalability while reducing gas fees. 

Degen Chain 

Degan Chain is a popular L3 blockchain built on top of BASE, the popular L2 blockchain developed by Coinbase, and while mainly intended for memecoins, it’s become quite popular. Degen Chain has a relatively impressive transaction volume (at least for L3 chains) and now supports a large ecosystem of tokens, including Degen Swap (DSWAP) and Degen Pepe (DPEPE). 

Limitations of Layer-3 Blockchains 

While L3 blockchains do have many benefits (as we list earlier in this article), they also do have significant limitations. In particular, when using some L2 platforms, finding validators for L3 chains can be challenging. In addition, since L3 chains are typically built on top of L2 chains, they inherit the security of the L2 chain, which inherits the security of the L1 chain. This relatively long “chain of security” can potentially lead to security issues for developers and users. In addition, while L3 developers have some degree of flexibility regarding tokens, the tokenomic flexibility allowed often isn’t complete. 

Supra Containers as an Alternative to Layer-3 Blockchains

As we can see, while L3s have certain advantages for dApp developers, they also have significant limitations. Fortunately, Supra has developed one of the few viable alternative to appchains– Supra Containers. 

Supra Containers give builders dedicated blockspace on Supra’s L1, with the freedom to build their own ecosystems with complete control, high performance, flexible scalability, and no blockspace congestion. Better value capture and control than appchains, minus the infra costs. Containers also inherit Supra’s shared security, performance, and access to vertically integrated services.

Specific benefits of Supra Containers include: 

• Ability to Use Any Gas Token: Developers can use any token as the native gas token in their Container, such as a stablecoin or the project’s native token, just like an appchain.
• Customizable Fees: dApp developers can can adjust transaction gas fees in their Container like a local fee market. Gas fees can be fixed for any conceivable action, and transactions can even be gasless. 
• Complete Control: dApp developers get complete governance command over their blockspace, allowing them to control smart contracts, assets, and access-criteria within their Container.
• No Validators Required (and Fewer Fees): Devs who want to build their own appchain or L2, need to pay data availability fees, sequencer fees, run your own validators, and get infrastructure integrations — each of which comes with high costs. Supra Containers eliminate these costs by offering dedicated blockspace on Supra’s Layer-1 with access to native oracle services.
• No Network Congestion: Network congestion can cause unexpected gas fee spikes on public blockchains, which can disrupt user experiences and app performance. Containers give dApps dedicated blockspace on Supra’s L1, eliminating uncertainty and ensuring consistent gas and performance even if gas fees rise in the network.

To learn more about Supra Containers, click here to read our whitepaper or watch an in-depth video that explains the core elements of Containers and their benefits for next-gen dApp developers who want lower fees, higher speed, and most importantly, the flexibility and independence to do things their way.