What is L3?

To understand Layer 3 (L3), let’s start with the basics of blockchain. Blockchain is a distributed ledger technology, much like a decentralized database. Every transaction, whether it’s a transfer or the execution of a smart contract, is recorded on the chain. While this design is highly secure, as user numbers increase, networks can become congested, slowing transactions and driving up fees (Gas fees). To address this, Layer 2 (L2) solutions were developed.

L2 acts as a scalability layer on top of the main blockchain (Layer 1), handling some transactions off the main chain. L2 processes multiple transactions on a secondary chain and submits the final results to the main chain. It’s like having an additional service road alongside a highway to relieve traffic, making the main chain faster and cheaper.

Layer 3 (L3) takes scalability a step further. Think of it as a more customized version of L2. L3 provides highly personalized optimizations for specific applications like gaming, enterprise systems, or social networks. Developers can create independent blockchain environments that cater specifically to these use cases without competing for resources with other applications.

Source: Orbs Official Website

Why Layer 3 Matters

The main purpose of L3 is to create a more customized environment for decentralized applications (dApps). For example, L3 protocols allow the development of dedicated blockchains optimized for industries like gaming, decentralized finance (DeFi), or enterprise solutions. These specialized blockchains offer faster transactions, lower fees, and stronger privacy features—essential for applications that involve frequent micro-transactions or sensitive data.

Additionally, L3 addresses the issue of interoperability between blockchain ecosystems. While L2 enhances scalability, it cannot often enable smooth communication between blockchains. L3 introduces protocols like cross-chain bridges, enabling assets and data to flow seamlessly across various chains. For instance, an Ethereum-based DeFi app can interact with a gaming app on Solana.

Key Benefits of Layer 3

L3’s benefits are reflected in several key areas:

1. Lower Fees: L3 further streamlines transaction processes, reducing costs. It’s like having a custom-built highway for your use, with lower fees and greater efficiency since you’re not sharing resources with others.
2. Improved Privacy: L3 offers stronger privacy protections, making it ideal for scenarios requiring privacy, such as enterprise-level transactions or the handling of sensitive data. It ensures data security and prevents information leaks.
3. High Customization: Different applications have different needs. L3 can be customized to meet these needs. For example, a blockchain specifically designed for gaming can handle high-frequency virtual asset transactions without competing for network resources with financial or social applications.
4. New Economic Models: L3 allows developers to create new token economies, even enabling non-Ethereum tokens for Gas fee payments or user rewards. This opens up more economical design options for communities and applications.

If blockchain is like a highway, L2 is the service road that relieves the main road’s traffic, while L3 is a dedicated lane designed for specific needs. L3 offers greater efficiency, lower costs, enhanced privacy, and is customizable for different scenarios, making it an essential tool for blockchain scalability in the future.

Source: coingecko

Practical Applications of Layer 3:

1. Gaming: L3 blockchains are ideal for gaming applications with fast transaction speeds and low fees. Games with complex economic systems (like “play-to-earn” games) can use L3’s microtransaction-friendly structure to process in-game purchases quickly.
2. Decentralized Finance (DeFi): L3 supports faster, more efficient DeFi operations, enabling real-time trading and cross-chain liquidity management.
3. Supply Chain Management: L3 enhances transparency and traceability in supply chains, allowing for real-time tracking of goods and secure data exchanges between stakeholders.

In conclusion, Layer 3 significantly improves blockchain technology’s scalability, customization, and interoperability. It builds upon L2’s foundations, opening up more use cases for blockchain. As L3 continues to evolve, it is expected to see wider adoption in industries that require high performance and cross-chain functionality.

Top Ten Layer 3 Project Analysis

1. Xai Network

Source: XAI Twitter

Xai Network is a Layer 3 blockchain built for Web3 gaming, designed to handle large-scale parallel transactions and reduce costs for frequent in-game transactions. The network supports complex game ecosystems, allowing players to seamlessly own and trade in-game assets. Using Arbitrum’s technology, Xai provides a more scalable and cost-efficient environment than traditional blockchains, ensuring real-time gameplay and a smooth player experience.

The XAI token is used not only for Gas fees but also as in-game currency, further expanding blockchain’s use in gaming. With parallel processing technology, Xai Network significantly improves transaction speed and network efficiency, solving the microtransaction bottleneck, and supporting the growth of popular games like Axie Infinity and Gods Unchained.

2. Orbs

Source: Orbs Official Website

Orbs is a Layer 3 public blockchain focused on optimizing smart contract execution. Developers can deploy and run complex smart contracts on Orbs as a decentralized serverless cloud without managing physical servers. Orbs enhances the capabilities of existing Layer 1 and Layer 2 solutions, simplifying the development of smart contracts and enabling multi-chain operations across Ethereum and Polygon.

Orbs offers a unique “enhanced execution” feature, allowing developers to build complex decentralized applications without worrying about infrastructure. With its multi-chain PoS model, Orbs provides secure, scalable smart contract solutions, especially for decentralized applications requiring large-scale deployment.

3. DegenChain

Source: Degen Official Website

DegenChain is a Layer 3 blockchain designed for decentralized social and gaming platforms. Its focus is on seamless tipping, rewards, and interactions on the Farcaster platform. By integrating Base and Arbitrum Orbit technologies, DegenChain offers an efficient, low-cost social platform where users can easily create, trade content, and process large microtransactions. This high throughput and low fee structure greatly enhance the user experience, making decentralized social finance (SocialFi) more practical.

DegenChain’s core token, DEGEN, plays a critical role through an innovative tipping mechanism that allows community members to reward quality content creators directly. This encourages content creation and builds a self-sustaining community economy. DegenChain calls itself “the Las Vegas of the blockchain world,” providing a unique and vibrant platform for developing decentralized applications (Degen apps).

Its architecture ensures low-latency transaction processing and supports large-scale social interactions. With its unique ecosystem design, the platform has processed over 500,000 transactions and gained hundreds of thousands of users, establishing itself as a leader in decentralized social and gaming applications.

4. zkSync Hyperchains

zkSync Hyperchains is a Layer 3 blockchain developed by the zkSync team. It focuses on scalability and cross-chain interoperability using zero-knowledge proof technology. By utilizing zkRollup technology for data compression and security, zkSync Hyperchains allow on-chain applications to achieve low costs and high throughput while maintaining strong security.

Its modular framework, ZK Stack, allows developers to customize blockchain environments according to application needs. zkSync Hyperchains significantly improves performance, particularly for decentralized finance (DeFi) and real-time transaction scenarios, ensuring fast communication between Layer 2 and Layer 3 and reducing transaction latency.

5. Arbitrum Orbit

Source: Arbitrum Orbit

Arbitrum Orbit is a Layer 3 framework built on the Nitro platform, allowing developers to create customized blockchains to meet specific business needs. It supports low-cost, scalable on-chain operations and integrates seamlessly with other Layer 2 chains, making it ideal for applications requiring flexibility and customization.

With Arbitrum Orbit, developers can design dedicated blockchains for use cases such as enterprise, social, or gaming applications while maintaining Ethereum’s security and decentralization. Its simple deployment eliminates the need for complex trust models, lowering the barrier to building Layer 3 solutions.

6. Apechain

Source: Apechain Official Website

Apechain is a Layer 3 blockchain built by Yuga Labs for the BAYC (Bored Ape Yacht Club) community. It provides efficient, customizable on-chain support for metaverse and gaming applications. Integrating Arbitrum Orbit, Apechain serves BAYC’s virtual world and manages tokenized assets.

Apechain enhances the use of APE tokens by extending their application to the metaverse and gaming. It increases interaction within the BAYC community and drives virtual world development while creating more economic value for APE tokens.

7. Animechain

Source: Animechain Twitter

Animechain is a Layer 3 blockchain launched by the Azuki project. It is designed to create a customized on-chain environment for anime content creators and fans. With Arbitrum Orbit, Animechain provides a high-performance platform supporting NFTs and the creator economy, allowing anime fans to securely create, trade, and interact.

Focused on the anime sector, Animechain offers a highly customized ecosystem for anime culture lovers. Through on-chain interactions and NFT integration, anime creators can engage better with their communities and profit from their creations.

8. Polygon Supernets

Polygon Supernets is a highly scalable and customizable Layer 3 solution designed to rapidly deploy gaming, DeFi, and enterprise applications. Its flexible design allows developers to create dedicated blockchains according to specific needs, improving performance and transaction efficiency.

With its rapid deployment capabilities, Polygon Supernets supports a wide range of enterprise applications, making blockchain more practical in business and finance. Its scalable architecture allows for efficient on-chain operations for millions of users.

9. zkLink Nova

zkLink Nova is a Layer 3 blockchain focused on DeFi applications. It uses zkRollup technology to significantly reduce Gas fees while ensuring seamless cross-chain transactions and interoperability.

With zero-knowledge proof technology, zkLink Nova provides lower costs and higher security, making it ideal for DeFi applications requiring frequent transactions. Its Validium-based data storage model makes zkLink Nova an essential part of the DeFi ecosystem.

10. Nautilus Chain

Nautilus Chain is a modular Layer 3 blockchain launched by the Zebec ecosystem. It aims to solve scalability and privacy limitations in existing blockchains with highly customizable expansion solutions. Built on Celestia and Eclipse Layer 0 platforms, it supports various virtual machines, including EVM and Solana VM, offering developers flexibility.

Its modular architecture allows different functions (like storage, computation, and consensus) to be handled separately, improving scalability and processing efficiency. As the first EVM Rollup with parallel processing capabilities, Nautilus Chain is suited for decentralized applications requiring high performance and low latency. It also provides GDPR-compliant privacy protection for European markets. Nautilus Chain combines Optimistic Rollup and ZK Rollup, initially relying on the former while gradually transitioning to the latter for improved performance and security.

Conclusion

As blockchain technology advances, Layer 3 emerges as a central force driving the industry’s future. Unlike traditional Layer 1 and 2, Layer 3 offers greater flexibility, enabling highly customized designs that cater to specific use cases. This flexibility strengthens privacy protections and promotes broader blockchain applications in decentralized finance (DeFi), gaming, enterprise solutions, and more, thanks to more efficient economic models.

The ten L3 projects highlighted in this article demonstrate significant progress in scalability, interoperability, and customization. Projects like Nautilus Chain improve performance with their modular architecture, while Xai Network and DegenChain illustrate Layer 3’s potential in gaming and social platforms. These innovations are accelerating the growth of decentralized applications and showing the vast possibilities for Layer 3’s future large-scale adoption.

Layer 3 will remain a key player in the Web3 ecosystem as these technological frameworks evolve. Blockchain is no longer confined to financial applications—it is becoming the infrastructure for various innovative uses. The rise of Layer 3 represents a major step toward mainstream blockchain adoption, paving the way for even more decentralized applications in the future.