Data from April 1st showed that in the past 24 hours alone, L3 chain DegenChain has seen more than 27,200 independent transactions in just four days since its launch, with a transaction volume of nearly $100 million, and the highest daily bid exceeding $0.06. DEGEN has risen more than 40 times in the past half month. The market value of the Degen project has also exceeded $1 billion in just three months, and its platform Farcaster is breaking user activity records, which shows its rapid growth momentum, and the market is also sending signals of increasing excitement about L3 networks such as DEGENChain.
However, while the market is excited about the L3 network, this phenomenon has attracted constant controversy in the community. Marc Boiron, CEO of Polygon Labs, expressed his dissatisfaction with the third layer (L3) network, saying that their existence is taking away the value of Ethereum. This view is also shared by Mert Mumtaz, CEO of Helus Labs, who believes that characterizing L3 as a centralized server in essence and positioning it above other centralized servers (L2) controlled by multisigs.
With the popularity and expansion of DegenChain's influence, the L3 network narrative has already gained enough attention on the stage. This article will focus on the Layer3 network, from the popularization of the underlying concepts to the successful analysis of DEGEN, and then share several excellent and well-known Layer3 projects to jointly explore this blue ocean full of opportunities.
History of blockchain network solutions
Before understanding 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 Layer1 include Bitcoin chain, BSC chain, Ethereum chain, etc. The Layer 1 blockchain network provides the basic infrastructure for developing dApps. Developers can create layers for transaction settlement and verification for smart contracts, dApps, and other blockchain layers. Another important highlight of Layer 1 blockchains is that they do not rely on any other network. As projects on Layer1 have sprung up like mushrooms after rain, the network cannot bear the increasing execution and computing volume brought about by the rapid development of the ecosystem. In order to complete transactions in a congested environment of the public chain, high transaction costs have to be paid. Therefore, Layer2, under the banner of reducing fees and expanding capacity, came into being.
The second layer network is a key component of the development of blockchain and Web3. Some common examples of Layer2 include Arbitrum, Optimism, Polygon, etc. The basic optimization logic of Layer2 is to strip and layer the public chain functions, leaving the consensus mechanism that provides security in Layer1, and delegating the calculation and execution to Layer2, so that the public chain becomes the settlement layer of Layer2, which is easier to implement and operate than cross-chain and sharding mechanisms. Under the premise of maintaining a decentralized model, Layer2 maximizes operational efficiency, but it is still insufficient in highly customized application scenarios and intercommunication between protocols, which is the opportunity for the emergence of Layer3.
The Layer 3 expansion solution is the next upgrade and improvement on the Layer 2. Ethereum founder Vitalik also summarized when talking about the real-world application of Layer 3: "L2 is used for expansion, and L3 is used for customizable expansion. This customization accurately matches the special scenarios used by users and the application direction preferred by developers. At the same time, L3 has weak trust expansion characteristics, leaving data availability to trusted third parties or committees, further protecting user privacy and security of use." In addition, Layer 2 solutions cannot facilitate communication between different protocols. Users seek interoperable protocols and cross-chain dApps that allow them to move seamlessly throughout the decentralized service environment. The application scenarios of Layer 3 solutions are clear, and demand has become a top priority.
The rise of L3 chain DEGEN
Degen was launched in the Degen channel on Farcaster in January 2024, distributing tokens between builders, content creators, and users. It reshapes the Farcaster ecosystem, allowing Casters to reward high-quality content creators with DEGEN tokens. As of April 1, DEGEN tokens have 83,000 holders, with more than 553,000 transactions, and are still growing rapidly.
DEGENChain is an L3 tailored for the Degen community, which can make new attempts in rewards, community rewards, payments, games, etc. The team behind it is Syndicate, who has worked with multiple suppliers such as Conduit, Decent and Airstack to improve convolution, bridging and data APIs. It is an L3 built with ArbitrumOrbit, using Base for settlement and ArbitrumAnyTrust for data availability, thus ensuring low cost and scalability. This effort marks an important step for EVM-compatible third-layer solutions, aimed at expanding the scope of community rewards, tips and payments. 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 in community tokens with its own L3.
Unique factors for the rise:
1. Innovative airdrop and reward mechanism: DEGENChain introduces a unique airdrop gameplay, which allocates reward amounts based on user activity and participation. This mechanism encourages users to create and share high-quality content, while also promoting the circulation and value growth of DEGEN tokens. Since January, Degen has quickly become popular in the Farcaster community through high-quality reward activities. Community members can reward their favorite high-quality content in the form of number of comments + DEGEN. The airdrop amount is based on the total amount of rewards received by users from others every quarter, so users need to post good content on Farcaster to receive rewards. Many active users even reward thousands of dollars a 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 reward high-quality content creators and use DEGEN tokens. This interactive model greatly enhances the cohesion and activity of the community.
3. Diversified application scenarios: DEGENChain is not limited to a single application, but has expanded the application scenarios of its tokens through cooperation with multiple projects and DApps, such as Drakula, DegenCast, etc. This diversified strategy makes DEGEN tokens useful in different platforms and applications, thereby increasing its practicality and attractiveness.
The decentralized TikTok Dracula on the Base chain was launched on March 14. The Dracula app uses DEGEN tokens as tokens. Users can use DEGEN tokens to purchase their favorite bloggers, which adds scenarios and value to the application of DEGEN tokens.
4. Angel round financing brings financial support: In February, Degen announced the completion of 490.5 ETH (about 1.47 million USD) of angel round financing, which will be used to develop the Degen ecosystem and community. Part of the funds were given to some community projects, such as Drakula, which also laid the groundwork for Degen's utility.
5. Unique market positioning: DEGEN Chain is positioned as a paradise for meme coins and experimental projects. This unique market positioning makes it stand out in the field of cryptocurrency. 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 has quickly stood out with its community-first approach and innovative third-layer blockchain technology, becoming a vibrant, rapidly expanding platform in the Farcaster ecosystem. In just the first week of launch, developers have launched multiple applications on DEGENChain, most notably:
DegenSwap: DegenSwap is the main decentralized exchange on DEGENChain, facilitating the trading and exchange of various cryptocurrencies, playing a vital role in the liquidity and user engagement of the ecosystem.
Memecoins: The popularity of various memecoins such as $CET, $DINU, $PURP, etc. has soared. These tokens not only attracted people’s attention, but also encouraged more users to build bridges with Degenchain, promoting its active market activities.
DegenChain is quickly evolving into the Las Vegas of blockchain, providing a sandbox for cryptocurrency developers to explore community engagement through tipping, bounties, and games.
Sharing of well-known Layer3 projects
1.StarkWareAppchains：
It is the Layer3 solution of StarkWare, one of the pioneers of Layer2 solutions.
StarkWare Appchains offers a high degree of customization, developers can choose different consensus mechanisms, data availability models, network configurations, fee mechanisms according to their needs, and even issue their own tokens to charge fees. By using Appchains, dApps can achieve better performance and cost-effectiveness on the basis of Starknet. Appchains allows for optimized performance, increased throughput, and provides powerful customized solutions for decentralized applications. They can also achieve lower transaction costs and greater scale, providing users with a better user experience.
2.NautilusChain：
It is a public chain launched by the Zebec community and is considered to be one of the latest Layer3 system architectures in the industry. With the support of Layer0 facilities such as Celestia and Eclipse, Nautilus Chain aims to provide a parallelized and high-speed EVM Rollup expansion solution. Features of Nautilus Chain include modular chain design and enhanced privacy through ZK Rollup technology. The project also plans to launch global activities to promote the popularization of Layer3 concepts and attract developer participation.
3.ArbitrumOrbit: It is a framework in the Arbitrum ecosystem that allows development teams to create and launch their own dedicated chains, which can be Layer 2 or Layer 3 chains, and settle them to Arbitrum's Layer 2 chain, such as ArbitrumOne, ArbitrumNova or ArbitrumGoerli.
Arbitrum Orbit provides unparalleled customization capabilities, developers can customize their own gas tokens, privacy settings, permission controls, etc. according to the specific needs of their projects. Orbit Chain uses the Arbitrum Nitro technology stack, which is currently the most advanced blockchain expansion technology. Orbit Chain can benefit from future upgrades of the Nitro technology stack, including performance optimization, permissionless verification, and Arbitrum Stylus.
4.zkSyncHyperChain：
zkSync is a Layer 2 solution based on zero-knowledge proof, and HyperChain is its proposed Layer 3 solution. zkSyncHyperChain utilizes zero-knowledge proof (ZKP) technology, a cryptographic method that allows one party (prover) to prove to another party (verifier) that a statement is correct 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 will be verified on the Ethereum main chain, ensuring the same level of security as Ethereum. The goal of zkSyncHyperChain is to achieve hyper-scalability, that is, to process an unlimited number of transactions without marginal impact on security or cost.
5.DappLink：
This is a universal Layer3 technology solution. DappLink adopts a modular pluggable design and supports different module plug-ins such as social games and DeFi. This design allows different Layer3 modules to be started according to different application scenarios to meet specific needs. The core technologies of DappLink include the cross-chain interoperability protocol, the Layer3 reverse pledge protocol, and the Layer3AppChain. The cross-chain interoperability protocol supports a wide ecosystem and allows assets to be transferred between different chains; the Layer3 reverse pledge protocol ensures the operation and security of the Layer3AppChain node network.
Related link: https://bridge.dapplink.xyz/home
The above projects are just a small part of the Layer3 field, and there are many other projects under exploration and development. With the development of blockchain technology and changes in market demand, we can foresee that there will be more Layer3 projects in the future to meet the needs of different industries and application scenarios. The emergence and development of Layer3 projects marks the progress of blockchain technology in solving scalability, cost and security issues. The emergence of new things is always accompanied by controversy and doubts, but it is undeniable that this has also further promoted the maturity and prosperity of the Web3 ecosystem.
