With the completion of the Ethereum merger, founder Vitalik Buterin turned his attention to other things that could help improve the network. Ethereum Layer 2 protocols had been a big deal in the bull market of 2021, and even now they continue to garner support from network users who continue to use these roll-ups. Now Buterin pointed out the possibility of layer 3 protocols on the network. Here is what he expects of them.
Ethereum layer 3 protocols
In a post, Ethereum founder Vitalik Buterin discusses the idea of Layer 3 protocols that are now circling the space. Early on, the idea started that with the functionality of existing Layer 2 protocols, it was possible to build on them to provide even more scalability. Buterin refutes this in his article: “Unfortunately, such simple Layer 3 designs rarely work so easily.” So what can make a successful Layer 3 protocol?
The bottleneck comes from the data that needs to be stored on the blockchain when processing transactions. Layer 2s already do a good job of compressing the data needed to store on-chain transactions, but they don’t eliminate the need to store data on-chain. Considering this, once the data is already compressed once to reduce its size, it is impossible to compress it again. This means that it is not possible to get more scaling by simply creating a layer 3 rollup on top of a layer 2 rollup.
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The natural conclusion about how Ethereum Layer 3 protocols work would then be that they would have different functionality than the already existing Layer 2 protocols. So where an L2 would focus on scaling, an L3 would go into more specialized features like privacy. This eliminates the idea of wanting to “improve” Layer 2 compression and instead gives L3s something new to work on and focus on.
This custom functionality can go towards anything, really. This can go to custom scaling where applications could use data compressed for specific applications according to a particular data format, perform calculations using something other than EVMs, etc. Buterin also notes that where Layer 2 solutions are for easel scaling, Layer 3s can be for “loosely reliable scaling (validiums)”.
Layers 3 would also likely provide better operations for cross-chain transactions because the “three-layer model allows an entire sub-ecosystem to exist in a single rollup, which allows cross-domain operations within that ecosystem to happen very cheaply, without the need to go through the expensive layer 1.
Ethereum Layer 3 protocols are still a conceptual idea at this time, but the founder of Ethereum points to a framework that has been proposed by Starkware as showing great promise. This more sophisticated framework goes beyond the school of thought of simply stacking another layer on top of Layer 2 and expecting it to increase compression. Buterin stresses that it’s a good idea “if it’s done the right way”.
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