As the blockchain ecosystem grows, so does the demand for flexible, adaptable technology.
Scalability is about making technology more accessible to Web3 builders and consumers. If developers can build scalable applications, they can reach more users without significantly increasing their costs or multiplying their resources. For those looking to start a chain with limited resources, Layer-3s can be a promising opportunity.
By reducing operational overhead and onboarding costs, Layer-3s are quickly becoming an important part of the blockchain ecosystem to give developers more flexibility and growth opportunities.
When Layer-3s started trending, they were initially met with skepticism. Building on a layer 2 could add complexity and unnecessary fragmentation, and adding more layers could make the app ecosystem more difficult to navigate, leading to a lack of interoperability.
But as more use cases emerge, it becomes clearer: Layer-3s can lower the barriers to entry for new chains and reduce user onboarding costs with minimal security tradeoffs.
The accessibility of layer 3s
Data availability costs continue to decrease with increasing blob size and alternative data availability tiers. The costs of operating a chain then increasingly become the costs of submitting data commitments and state roots for withdrawals.
Thus, the fixed overhead costs for operating layer-3 are significantly lower than the fixed overhead costs for operating layer-2. Submitting data commitments and output roots to a layer-2 is significantly cheaper than the cost of submitting those same transactions to Ethereum Mainnet.
Additionally, when a layer 2 chain is newly launched, it can be expensive to add tokens to that chain as a new user. It requires both acquiring tokens at layer-1 and then depositing those tokens from layer-1 to layer-2 – a total of two layer-1 transactions. During the spikes in Ethereum Mainnet rates, we have seen these transactions become prohibitively expensive for new users. With a layer 3, onboarding for a new user will only involve two layer 2 transactions, which is a small portion of the cost.
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This provides application developers and supply chain managers with new, more cost-effective options to ramp up use and onboard new users.
We are already seeing this trend with Base as an example; the chain has stimulated excessive demand and expanded support for Tier 3 companies that build on top of it.
The entire blockchain ecosystem can benefit from Layer 2’s commitment to the rapidly growing Layer 3 ecosystem, with even more developers able to leverage the power of Layer 2 tech stacks.
Key features driving the rise of Layer-3s
From my perspective, demand for Layer-3s is increasing and two features have quickly become the most requested.
The first is custom gas tokens, which allow developers to use a layer 2 token as the native gas token for a layer 3. Custom gas tokens are great for community development. If there is an existing community rallying around a layer 2 token, using it as the native token to pay for gas is a concrete next step toward building an ecosystem. Custom gas tokens can enable new use cases such as in-game currency for gaming ecosystem chains and token subsidies that directly subsidize developer and user fees
The second sought-after feature is alternate data availability, or alt-DA. This gives developers the ability to select the DA layer of their choice, significantly reducing transaction costs with the aim of minimizing security tradeoffs.
Combining a layer-3 with alt-DA can give developers low overhead to post to layer-2. This is in addition to the sustainably low cost of data availability, all of which contributes to the cheapest possible deployment of a layer 2 technology stack.
As layer-3s gain momentum, I expect many of these chains to launch with both custom gas tokens and alt-DA.
Enabling the future of layer 3
Developers have more options than ever before, and it’s “choose your own adventure” when it comes to deploying a tier-2 or tier-3. They all have their pros and cons, and there is room for everyone to succeed.
When deploying a standard configuration, Layer-2s will always be the most proven, forward-compatible way to launch a chain. However, Tier 3s increase the accessibility of launching a new chain at an ultra-low cost. I see key features like custom gas tokens and alt-DA as important for the growth and adoption of Layer-3s, which in turn are important for driving innovation with a shared vision for scaling Web3.
Kevin Ho is co-founder of Optimism and a member of the product team at OP Labs, where he oversees protocol development and contributes to the Optimism Collective. OP Labs’ mission is to accelerate Ethereum adoption with the most secure, decentralized open source tech stack, the OP Stack. OP Labs also provides resources and support to the developer community as they build and deploy on the Superchain.
