Layer 3 Blockchain technology is an exceptional combination of technologies from the 21st century, like game theory, cryptography, and more. This is why blockchain technology can be used in a broad range of applications, including the latest fintech and cryptocurrency technology.
For those unfamiliar with the concepts of games theory and cryptography, that is just the encryption and decryption process for data. Game theory is the research of strategic interactions and mathematical models used by rational decision-makers.
What Is a Layer 3 Blockchain?
Layer-three solutions boost distinct blockchains by integrating cross-chain capabilities to enable real interoperability. It is important to emphasize that the entire system is not dependent on intermediaries or custodians.
Since L2, as well as L1 solutions, are near, the idea of creating interoperability protocols at a different level is an ideal concept. This idea resulted in the development of the L3 services.
To avoid unnecessary complexity of the subject, Think of L3 protocols as a means to make all the layers simpler. They serve as the intermediaries between the L1 and L2 systems and ignore the bulk of their differences in operation.
Why Does Blockchain Need a Layer 3?
The most obvious question that comes to everyone’s minds regarding layers 3 solutions in the blockchain is the necessity of the identical. Anyone familiar with the blockchain field is likely to have heard of the blockchain trilemma.
This phenomenon pits three key elements against one another, and blockchain networks can be restricted to which feature they’d like to move. Incredibly, the genesis of blockchain layers began with the trilemma. This implies that blockchain networks can meet all three characteristics.
The Blockchain Trilemma
The three components of the blockchain trilemma comprise decentralization as well as security, as well as stability. Nearly every blockchain-related project has to sacrifice one aspect to gain better performance from three other factors. There are trade-offs in common scenarios like Ethereum as well as Solana.
Ethereum and Bitcoin focus more on security and decentralization, while Solana focuses more on stability and safety. The scaleability dilemma is a major issue when integrating all three components in layer one blockchain.
Thus, a multi-layer structure could provide a cost-effective and cost-effective method to ensure security, scalability, and decentralization.
Now, it’s crucial to consider whether it is necessary to introduce the Layer 3 Blockchain protocol is needed when you use two layer protocols. What could be the motive behind the introduction of layer 3?
The main reasons for introducing the multi-level structure in blockchain networks are the best solution to scaling issues. Layer 2 blockchain technology can aid in solving issues related to scaling.
What’s the purpose of layer 3 blockchain projects? In reality, the blockchain trilemma is not the only problem that affects cryptocurrency market users. Additionally, layer 2 solutions are unable to address the issues regarding compatibility.
Layer 2 protocols didn’t provide anything to view, exchange, access, or transfer data between computers. Interoperability is a term used to describe interoperability within the blockchain industry and is often referred to as cross-chain capability.
This means that two different blockchain networks with their respective ecosystems can be in contact with one another and conduct transactions without centralized intermediaries.
For instance, it’s virtually impossible to transfer Bitcoin to the Ethereum blockchain and utilize Bitcoin across several DeFi applications. Most of the solutions that offer the ability to trade crypto across several apps and DeFi solutions come with some central control.
he importance of Layer 3 Blockchain protocols is evident when you think of the popular DeFi apps. A lending platform, Aave, and the decentralized exchange, Serum, operate on various blockchain networks.
This makes it virtually impossible for anyone else to use the services through these platforms. Therefore, the inability to interoperate between blockchain networks is the primary reason behind the introduction of layers 3 technology.
How Does Layer 3 Solve Interoperability Problems?
The interaction of layer 2 solutions and Layer 1 ones leads to the need to implement interoperability protocols in a third layer.
If you’re looking for the answer to “What is a Layer 3 blockchain?” you need to be aware of the numerous variations between layers 2 and 1 . blockchains. Layer 3 is a strategy to solve the interoperability issue while ensuring simplicity in the layers beneath.
Layer 3 relies on the abstraction of various factors like technology, functions, and features to serve users across various ecosystems. The abstraction of these differences via Layer 3 or L3 protocols allows various ecosystems and networks to communicate and connect.
A brief overview of each Layer 3 Blockchain protocol would demonstrate how they function in solving interoperability issues. They function similarly to the internet protocol on the internet and guarantee data transmission through packets.
The benefits of layer 3 solutions are also in measuring the value of packets and routing value packets through many DLT networks. The result is that layer 3 protocols can provide an efficient connection to layer 1, layer 2, and other chains, along with the applications and services within them.
Examples of Layer 3 Blockchain Protocols
The most crucial part of an analysis of Layer 3 Blockchain solutions is to highlight the instances of the same.
Numerous innovative Layer 3 Blockchain solutions are creating interoperability protocols to facilitate connections between various blockchain networks as well as layer 2 services as well as protocols. This is a brief overview of some best examples of blockchain layer 3 projects you should be looking up.
1: Interledger Protocol
Its Interledger Protocol or ILP of Ripple is the most well-known layer 3 technology on the market today. Ripple is a multi-layer system that has three distinct layers with distinct functions. Layer 1 functions as a blockchain ledger, while layer 2 provides local area networks, also known as LANs.
In addition, the Layer 3 Protocol of Ripple’s Interledger Protocol is designed to facilitate faster and more cost-effective transactions using Ripple’s blockchain.
Being one of the most well-known layer three blockchain protocols, it is the Interledger Protocol of Ripple offers an effective method of connecting the blockchain ecosystem.
You will notice that the operation of ILP is the same as the IP protocol. IP, which is also known as Internet Protocol.
2: IBC Protocol
The IBC protocol, also known as the Inter-Blockchain Communication Protocol of Cosmos, is yet another intriguing illustration of blockchain layers as part of the design of the upcoming blockchain-based projects. A close look at the structure of Cosmos will reveal how it is also a three-layer structure.
The Tendermint Core is the layer 1 protocol, whereas the Cosmos-SDK provides layer 2 protocol capabilities. The IBC protocol can help any application by providing solid and secure inter-module communication.
In addition, you will also be able to see the advantages of multi-chain smart contracts and cross-chain asset transfer using IBC. IBC protocol.
Being one of the best protocols at layer 3, IBC facilitates a reliable and secure interconnectivity module across blockchain networks. It can be used for various tasks like encryption, data transfer, and order processing across several blockchain networks.
ICON is among the instances of a singular layer 3 protocol that functions as a stand-alone solution. The major advantages for ICON as an interoperability protocol for layer 3 point toward its partnership with the Seoul government and Samsung.
The interoperability protocol operates by aggregating all blockchain information on one layer and connecting to various blockchain networks. ICON provides a viable method of establishing a unifying grouping of several blockchain networks.
The most popular layer 3 blockchain protocols will attract attention to Quant. Created as a secure alternative that can be used for large-scale blockchain networks, Quant helps in connecting public and private chains.
Quant utilizes its Overledger DLT gateway and numerous unique solutions to facilitate connectivity. Quant offers the most notable features of multi-ledger tokens and multiple-DLT smart contracts.
Additionally, this layer-3 protocol has been involved in partnerships with well-known companies like Oracle, Hyperledger, and Nvidia.
The examples of the layer 3 protocols show how important they are to the future of blockchain. Combining scaling solutions for layer 2 with L3 protocols to interoperate can solve the problem of fragmentation within the cryptocurrency space.
What device is in Layer 3, 3 that connects the two networks?
Routers are devices that operate on the network and are categorized as Layer 3 devices within the OSI Model. They process logical addressing data within the Network header of a packet, like IP addresses.
What are the layers in blockchain?
Blockchain architecture can be found in either private, public, or consortium forms. The blockchain’s layered structure is classified into six levels.
What is the best way to make the layer 3 change route?
Put it; a layer 3 switch can be described as a hybrid of a switch with a router. It functions as a switch that can connect devices within the same subnet or virtual LAN at lightning-fast speeds and has IP routing capabilities built in to serve in the role of a router.
The outline of fundamentals pertaining to layers 3 and 4 solutions demonstrates how they can open the way for blockchain’s future for blockchain. Interoperability is among the major obstacles to the widespread use of blockchain.
In the same way, L3 protocols can help promote the utilization of digital assets beyond the borders used in financial services. When blockchain is the catalyst for digital transformation, layers 2 and 3 solutions will help businesses take advantage of the surge in demand for blockchain.
The possibility of moving across blockchain networks and utilizing digital assets across different platforms could lead to development of new blockchain projects in the near future.
The most important thing is that the capabilities of current L3 protocols indicate the potential to transform the blockchain market with substantial benefit to value. Please find out more about layer 3 technologies and how they impact the Blockchain ecosystem.