Author: Zack Abrams, The Block; Compiler: Deng Tong, Golden Finance
Memecoin transaction activity has exploded on Degen, a Layer 3 network running on Base, which in turn runs on Ethereum.
The CEO of Polygon Labs criticized Layer 3 for stripping away the value and security of Ethereum and said the company has no plans to develop its own L3 network.
The Degen Chain network has attracted a fair amount of speculators since its launch last week, and its success has also attracted some criticism.
Built using Arbitrum Orbit, Degen Chain was launched on March 28 by infrastructure provider Syndicate as a dedicated ultra-low-cost network for the Degen token ($DEGEN), which has become the de facto community token for Farcaster Web3 users, and conduct social media services through it. Since Farcaster runs on the Ethereum Layer 2 network Base, the Degen Chain is a Layer 3 network, that is, L3.
As Farcaster sets new user activity records and its parent company sets its sights on unicorn valuation, Degen's early adopters have turned small stashes into fortunes: One investor invested less than $7,000 in the token The trader made a profit of over $2 million.
While making money off memecoins is nothing new to cryptocurrencies, Degen’s users made it one of the first L3 chains to gain significant adoption. On the Degen Chain, an ecosystem of even more memecoins, denominated in $DEGEN, transaction volume has reached tens of millions of dollars.
However, not everyone supports L3 networks like Degen Chain. Polygon Labs CEO Marc Boiron expressed his displeasure with the focus on L3 in an X post on Sunday, writing: “L3 exists solely to take value away from Ethereum. *You don’t need L3 to scale* This That’s why Polygon Labs doesn’t develop on L3.”
Boiron believes that L3 networks will siphon security and value from the Ethereum base layer. “If all L3s boil down to one L2, then Ethereum will essentially have no value and, therefore, Ethereum security will be at risk,” Boiron wrote in another X post. Boiron did not immediately respond to The Block’s request for comment.
Polygon Labs is known for a variety of Ethereum Layer 2 scaling solutions, including Polygon and the Polygon zkEVM chain, among other services. Polygon zkEVM experienced a brief outage over the weekend but has since been back up and running.
