Data on April 1 shows that in the past 24 hours alone, more than 27,200 independent transactions have occurred in just four days after the launch of the L3 chain Degen Chain, with a transaction volume of nearly $100 million, and the highest price in the day exceeded $0.06, and DEGEN has pumped more than 40 times in the past half a month. The market capitalization of the Degen project has also surpassed $1 billion in just three months, and its platform Farcaster is breaking user activity records, showing its rapid rise momentum, and the market is also sending a signal of increasing excitement for L3 networks such as DEGEN Chain.

However, while the market is excited about the L3 network, this phenomenon has caused controversy in the community. PolygonLabs CEO Marc Boiron expressed his displeasure with Layer 3 (L3) networks, saying that their existence is taking away Ethereum's value, a view echoed by HelusLabs CEO Mert Mumtaz, who argues that characterizing L3 as essentially a centralized server and positioning it as other centralized servers controlled by multisigs (L2).

With the popularity and influence of DegenChain, the L3 network narrative has stood on the stage and gained enough attention. This article will focus on Layer 3 networks, from the popularization of underlying concepts to the successful analysis of DEGEN, and then share several excellent and well-known Layer 3 projects to discuss this blue ocean full of opportunities.

The history of Blockchain network solutions

Before learning about Layer 3 networks, it is important to understand Layer 1 and Layer 2 Blockchains.

Layer 1 refers to the base layer of the Blockchain network. Some common examples of Layer 1 include Bitcoin Chain, BSC Chain, Ethereum Chain, etc. Layer 1 Blockchain networks provide the infrastructure for developing dApps, and developers can create layers for smart contracts, dApps, and other Blockchain layers for transaction settlement and validation. Another important highlight of Layer 1 Blockchain is that they are not dependent on any other network. With the mushrooming of projects on Layer 1, the network cannot bear the increasingly long amount of execution and computing brought about by the rapid development of the ecosystem short Layer 2, and has to pay high Transaction Cost to complete transactions in the congested environment of the public chain.

Layer 2 networks are a key component in the development of the Blockchain and Web3 landscape. Some common examples of Layer 2 include Arbitrum, Optimism, Polygon, and others. The basic optimization logic of Layer 2 is to strip and layer the functions of the public chain, leave the Consensus Mechanism that provides security assurance in Layer 1, decentralize computing and execution to Layer 2, and promote the public chain to become the settlement layer of Layer 2, which is easier to implement and operate than mechanisms such as cross-chain and Sharding. While maintaining the Decentralization model, Layer 2 maximizes operational efficiency, but is still insufficient in highly customized application scenarios and interoperability between protocol, which is where Layer 3 comes in.

The Layer 3 scaling solution is the next upgrade and improvement of Layer 2, and Ethereum founder Vitalik also summed it up when talking about the real-world application of Layer 3: "L2 is used for scaling, L3 is used for customizable scaling, and this customization accurately connects with the special scenarios used by users and the application direction preferred by developers." At the same time, L3 has the characteristics of weak trust extension, leaving data availability to trusted third parties or committees, further ensuring user privacy and use security." Protocols to that, Layer 2 solutions fail to facilitate communication between different protocols. Users seek interoperable protocols and cross-chain dApps that allow them to move seamlessly throughout the decentralization service environment. The use cases for Layer 3 solutions are clear, and the requirements have become imperative.

L3 Chain The Rise of DEGEN

Degen launches in January 2024 on the Degen channel on Farcaster, distributing tokens among builders, content creators, and users. It reinvents the Farcaster ecosystem, allowing Casters to tip premium content creators using DEGEN tokens. As of April 1, the DEGEN Token has 83,000 holders, more than 553,000 transactions, and is still rising rapidly.

DEGENChain is an L3 tailored for the Degen community, which can make new attempts in tipping, community rewards, payments, games, etc. The team behind it is Syndicate, which has worked with longest vendors such as Conduit, Decent and Airstack to refine the convolution, bridges, and data APIs. L3 is built with ArbitrumOrbit, Base for settlement, and ArbitrumAnyTrust for data availability, guaranteeing low cost and scalability. This effort marks a significant step forward for EVM-compatible Layer 3 solutions to expand the reach of community rewards, tips, and payouts. It is worth mentioning that DEGENChain is unique in that the DEGEN Token is also the native gas Token of the chain, making it a pioneer with its own L3 among community Tokens.

Unique Factors for the Rise:

1. Innovative Airdrop and tipping mechanism: DEGENChain incentivizes users to create and share high-quality content by introducing a unique Airdrop gameplay and allocating tips according to users' activity and engagement, while also promoting the circulation and value rise of DEGEN Token. Since January, Degen has quickly become popular in the Farcaster community through high-quality tipping activities, where community members can tip their favorite high-quality content in the form of the number of comments + DEGEN. The Airdrop quota is based on the total amount of tips received by users per quarter, so users need to post good content on Farcaster to get tips, and it is very long that active users can even reach $k per day.

2. Community-Driven Development: DEGENChain originated from the Farcaster community, and the active participation of this community provides a solid foundation for DEGENChain. Community members use DEGEN Tokens by rewarding high-quality content creators, and this interactive model greatly enhances the cohesion and activity of the community.

3. Longing application scenarios: DEGENChain is not limited to a single application, but expands the application scenarios of its tokens through cooperation with longing projects and DApps, such as Drakula, DegenCast, etc. This longing strategy makes the DEGEN Token useful across different platforms and applications, increasing its usefulness and appeal.

Decentralization Douyin Dracula on the Base on-chain was launched on 3.14, Dracula's app uses DEGEN Token as a token, and users can use DEGEN Token to buy favorite bloggers, adding scene and value to the application of DEGEN Token.

4. Angel round financing brings financial support: In February, Degen announced the completion of an angel round financing of 490.5 ETH (about $1.47 million), which will be used to develop the Degen ecosystem and community. Some of this share goes to community projects such as Drakula, which also paves the way for Degen's utility.

5. Unique market positioning: DEGEN Chain is positioned as a paradise for meme coins and experimental projects, and this unique market positioning makes it stand out in the Crypto Assets space. It not only provides a testing ground for emerging projects, but also provides investors with high-risk, high-return investment opportunities.

DEGEN Chain Ecosystem:

DEGENChain quickly stands out with its community-first approach and innovative layer-3 Blockchain technology as a vibrant, rapidly expanding platform in the Farcaster ecosystem. Within the first week of launch alone, the developers launched longest apps on DEGENChain, the most notable of which were:

• DegenSwap: DegenSwap is the leading DEX exchange on DEGENChain that facilitates the trading and exchange of various Crypto Assets and plays a vital role in the Liquidity and User Engagement of the ecosystem.
• Commemorative coin: The popularity of various Memecoins such as $CET, $DINU, $PURP, etc. has soared. These Token not only attract attention, but also encourage more long users to connect with Decan Chain and promote its active marketing activities.

DegenChain is rapidly evolving into on-chain Las Vegas, providing a sandbox for Crypto Assets developers to explore community engagement through tips, rewards, and gameplay.

Shared by well-known Layer 3 projects

1.StarkWare Appchains

It is a Layer 3 solution from StarkWare, one of the pioneers of Layer 2 solutions.

StarkWare Appchains offers a high degree of customization, and developers can choose different consensus mechanisms, data availability models, network configurations, fee mechanisms, and even issuance their own tokens to collect fees according to their needs. By using Appchains, dApps can achieve better performance and cost-effectiveness on top of Starknet. Appchains allow for optimized performance, increased throughput, and powerful custom solutions for decentralization applications. They also enable lower transaction costs and greater scale, resulting in a better user experience for users.

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2.Nautilus Chain

It is a public chain launched by the Zebec community and is considered to be one of the latest Layer 3 system architectures in the industry. Backed by Layer 0 facilities such as Celestia and Eclipse, Nautilus Chain aims to provide parallelized, high-speed EVM Rollup scaling. Features of Nautilus Chain include a modular chain design, as well as enhanced privacy through ZK Rollup technology. The project also plans to launch a global tour to drive adoption of the Layer 3 concept and engage developers.

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3. ArbitrumOrbit: It is a framework in the Arbitrum ecosystem that allows development teams to create and launch their own private chains, which can be Layer 2 or Layer 3 chains, and Settlement them into Arbitrum's Layer 2 chains, such as ArbitrumOne, ArbitrumNova, or ArbitrumGoerli.

Arbitrum Orbit offers unmatched customization capabilities, allowing developers to tailor their gas Token, privacy settings, permission controls, and more to the specific needs of their projects. The Orbit Chain leverages the Arbitrum Nitro technology stack, the most advanced Blockchain scaling technology available, and the Orbit Chain could benefit from future upgrades to the Nitro technology stack, including performance optimizations, permissionless verification, and Arbitrum Stylus, among others.

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4.zkSyncHyper Chain

zkSync is a Layer 2 solution based on zk-SNARKs, and HyperChain is its proposed Layer 3 solution. zkSyncHyperChain leverages zk-SNARKs (ZKP) technology, which is an encryption method that allows one party (prover) to prove a statement to another party (validators) to be true without revealing any information about the proof process. And unlike other solutions, zkSyncHyperChain can inherit the full security of Ethereum because it uses ZK-rollups technology. This means that all transaction data is verified on the Ethereum mainchain, ensuring the same level of security as Ethereum. The goal of zkSyncHyperChain is to achieve hyper-scalability, i.e., to process an unlimited number of transactions without marginal impact on security or cost.

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5.DappLink

This is a general-purpose Layer 3 technology solution, DappLink adopts a modular and pluggable design method, and supports different module plug-ins such as social games and Decentralized Finance. This design allows different Layer 3 modules to be launched depending on the application scenario to meet specific needs. DappLink's core technologies include cross-chain interoperable protocol, Layer 3 reverse stake protocol, and Layer 3 AppChain. cross-chain interoperability protocol support a wide ecosystem that allows assets to be transferred between different chains, while Layer 3 reverse stake protocol ensures the operation and security of the Layer3 AppChain Node network.

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These projects are just a small part of the Layer 3 space, and there are longest others in the process of exploration and development. With the development of Blockchain technology and changes in market demand, we can foresee that more long Layer 3 projects will emerge in the future to meet the needs of different industries and application scenarios. The emergence and development of Layer 3 projects marks the progress of Blockchain technology in solving scalability, cost and security issues, and the emergence of new things is always accompanied by controversy and doubts, but it is deniable that it also further promotes the maturity and prosperity of the Web3 ecosystem.

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