Layer 3 (L3) refers to a level of technology that is built on top of Layer 2 scaling solutions in the cryptocurrency ecosystem. It aims to further enhance the scalability and functionality of blockchain networks by adding another layer of off-chain technology on top of existing Layer 2 solutions.
Layer 3 solutions often involve complex protocols or applications that enable additional functionality, such as decentralized finance (DeFi) applications, non-fungible tokens (NFTs), or decentralized exchanges (DEXs). These applications require high transaction throughput and low latency, which L3 solutions aim to provide by offloading some of the network’s activity onto external systems.
By building on top of Layer 2 solutions, Layer 3 technologies can leverage the benefits of both off-chain and on-chain scalability, making them more efficient and scalable overall. This can help to address some of the limitations of Layer 1 blockchains, such as high fees and slow transaction times, while enabling new and innovative use cases for blockchain technology.
