Future of Layer 3 Blockchain: Trends, Challenges, and Opportunities

In the world of blockchain technology, Layer 3 blockchain is a term that has been gaining attention recently. It is an innovative technology that aims to solve the scalability and interoperability issues that have long plagued the blockchain industry. Scalability is now more crucial than ever as customer demand in the cryptocurrency industry rises. Thus, many of us are familiar with terms like “layer 1” and “layer 2” protocols in the context of blockchain technology.

Because a centralized authority is required, blockchains need to be extremely secure. They also need to be very scalable to handle increasing user numbers and transaction volumes. We will learn more about the future of layer 3 blockchain today, a technology that aims to offer scalability while upholding superior security.

Before we dive into Layer 3 blockchain, let’s first understand what blockchain layers are.

Blockchain layers refer to the different levels of a blockchain architecture that work together to provide different functionalities. 

A blockchain is typically made up of three main layers:

  1. Layer 1 – The foundational layer that includes the underlying blockchain protocol and consensus mechanism. This layer is responsible for validating transactions, creating new blocks, and maintaining the blockchain’s integrity. Examples of Layer 1 blockchains include Bitcoin, Ethereum, and Litecoin.
  2. Layer 2 – Built on top of Layer 1, Layer 2 is designed to provide additional functionalities such as scalability, faster transaction times, and improved privacy. Layer 2 solutions include payment channels (such as the Lightning Network for Bitcoin) and sidechains (such as the Liquid sidechain for Bitcoin).

Now, What is Layer 3 blockchain?

Layer 3, on the other hand, is a newer concept and is designed to provide even more advanced functionalities than Layer 2. It is often referred to as the “application layer” because it is where most of the blockchain applications are built. Layer 3 blockchain is a term that refers to the third layer of a blockchain network. It is a layer that enables the creation of decentralized applications (DApps) that interact with multiple blockchain networks seamlessly. 

It is responsible for providing a framework that allows DApps to interact with the blockchain network. This layer sits above the blockchain consensus layer and the data layer, making it the highest layer of the blockchain network.

To have a glimpse of the Future of Layer 3 Blockchain we need to know 

Why is Layer 3 Blockchain Significant and how it works?

Layer 3 blockchain is significant for several reasons and here you will get an idea of how it works.


One of the key features of Layer 3 blockchain is interoperability. Currently, there are many different blockchain networks, and they are not compatible with each other. This makes it difficult for developers to build DApps that can interact with multiple blockchain networks. 

Layer 3 blockchain solves this problem by providing a framework that enables DApps to interact with multiple blockchain networks seamlessly.

To achieve interoperability, Layer 3 blockchain uses a variety of techniques, such as cross-chain communication protocols, sidechains, and atomic swaps. Cross-chain communication protocols enable different blockchain networks to communicate with each other, while sidechains allow DApps to interact with different blockchain networks without affecting the main blockchain network. 


Another key feature of Layer 3 blockchain is scalability. Blockchain networks are currently limited in their capacity to process transactions, which has led to slow transaction times and high transaction fees. Layer 3 blockchain addresses this problem by enabling off-chain transactions that do not need to be verified by every node in the network. This reduces the computational load on the blockchain network, enabling it to process more transactions at a faster rate.

To achieve scalability, Layer 3 blockchain uses techniques such as state channels, plasma chains, and sharding. State channels enable off-chain transactions that can be settled on the blockchain network at a later time. Plasma chains enable the creation of secondary blockchains that can handle a large number of transactions, while sharding enables the partitioning of the blockchain network into smaller sections that can process transactions in parallel.

Smart Contract Functionality:

Finally, Layer 3 blockchain introduces advanced smart contract functionality. Smart contracts are self-executing contracts that can be programmed to execute automatically when specific conditions are met. Currently, smart contracts are limited in their functionality and cannot interact with multiple blockchain networks. 

Layer 3 blockchain enables developers to create smart contracts that can interact with multiple blockchain networks, opening up new possibilities for cross-chain transactions and collaborations.

To achieve advanced smart contract functionality, Layer 3 blockchain uses techniques such as cross-chain contract invocation and contract templates. Cross-chain contract invocation enables smart contracts to interact with different blockchain networks, while contract templates enable the creation of pre-built smart contract modules that can be reused across different DApps.

What are the Examples of Layer 3 Protocols?

The examples of layer 3 solutions would undoubtedly be the most crucial aspect of any discussion. Interoperability protocols for connecting various blockchain networks and layer 2 services or protocols have been developed by numerous new layer 3 projects. 

Here is a summary of some of the best layer 3 blockchain project examples you should follow.


The following well-known layer 3 blockchain technology would be Quant. For enterprise blockchain networks, the Quant layer 3 protocol was developed to make it easier to connect public and private chains. For interoperability, its protocol makes use of several cutting-edge technologies, including the Overledger DLT gateway.

Numerous noteworthy features are available with Quant, including multi-DLT smart contracts and multi-ledger tokens. Additionally, well-known businesses like Oracle, Hyperledger, and Nvidia have partnered with the Quant project and layer 3 protocol.

Interledger Protocol:

In the current market, the Interledger Protocol (ILP) of Ripple is essentially the most well-liked layer 3 solutions. Ripple has a multi-layer architecture with three different layers, each of which serves a different functional purpose. Local area networks, or LANs, are featured in layer 2, while layer 1 serves as the blockchain ledger. 

The layer 3 protocol in Ripple, called Interledger Protocol, aims to provide cheaper and quicker transactions on the Ripple blockchain top of that. The Ripple Interledger Protocol, one of the most well-known layers 3 blockchain protocols, provides an effective means of implementing interconnectivity in the blockchain ecosystem. You can see how the Internet Protocol, or IP, and ILP both do the same type of work.

IBC Protocol:

Another intriguing example of using blockchain layers in the architecture of new blockchain projects is the IBC protocol, also known as the Inter-Blockchain Communication Protocol of Cosmos. The three-layer architecture of Cosmos is also present, as can be seen by taking a closer look at it. 

IBC, one of the best layer 3 protocols, enables a trustworthy and secure module for interconnectivity between blockchain networks. Across multiple blockchain networks, it supports several tasks, including data transfer, authentication, and order.


One illustration of a distinct layer 3 protocol type that functions as a stand-alone solution is ICON. The strongest points for ICON as a layer 3 protocol point to its collaborations with Samsung and the Seoul government. 

The interoperability protocol connects various blockchain networks by compiling all blockchain data onto a single layer. For introducing a single unified congregation of various blockchain networks, ICON offers a solid solution. 

What are the Similarities Between Layer 1, Layer 2, and Layer 3 Blockchains?

While Layer 1, Layer 2, and Layer 3 blockchains have distinct roles in the blockchain network, there are some similarities between them as well. 

Let’s take a look at some of the similarities:

  1. Decentralization: All three layers of the blockchain are decentralized, meaning that there is no central authority controlling the network. Instead, the network is maintained by a distributed network of nodes that work together to validate transactions and secure the network.
  2. Security: All three layers of blockchain prioritize security as a core feature. They use cryptographic techniques to secure transactions and prevent unauthorized access to the network.
  3. Immutable ledger: All three layers of blockchain maintain an immutable ledger of transactions that cannot be altered or tampered with. This helps to ensure the integrity of the network and provides a transparent record of all transactions.
  4. Tokenization: All three layers of blockchain enable the creation of digital assets or tokens that can be traded or exchanged. This enables the creation of new forms of value and facilitates the transfer of value across the network.
  5. Smart contracts: All three layers of blockchain support the use of smart contracts, which are self-executing contracts that can be programmed to execute automatically when specific conditions are met. Smart contracts enable the automation of complex processes and the creation of decentralized applications.

Layer 1, Layer 2, and Layer 3 blockchains share many core features and principles. This shared foundation helps to ensure interoperability between different layers of the blockchain network and facilitates the creation of new use cases and applications for blockchain technology.

Conclusion: The future of Layer 3 blockchain

The future of Layer 3 blockchain looks promising, as it has the potential to address many of the challenges facing blockchain technology today. As Layer 3 protocols enable greater interoperability, scalability, and advanced smart contract functionality, we can expect to see more use cases for blockchain technology. 

This includes everything from supply chain management to decentralized finance to social media platforms. The continued development of Layer 3 protocols will also enable the growth of the overall blockchain ecosystem. 

As more advanced solutions are developed, we can expect to see more developers, investors, and users enter the space, creating a virtuous cycle of growth and innovation.

Overall, the future of Layer 3 blockchain looks bright, as it has the potential to enable greater interoperability, scalability, and advanced smart contract functionality. As the technology continues to evolve, we can expect to see even more advanced solutions that enable the creation of new use cases and applications for blockchain technology.

FAQs on Layer 3 blockchain:

Q: What are the Opportunities in Layer 3 blockchain?

A: Layer 3 blockchain presents several opportunities for developers, investors, and businesses. By leveraging the advanced solutions provided by Layer 3 protocols, they can create new solutions that solve real-world problems and drive the growth of the overall blockchain ecosystem.

Q: Is Ethereum a Layer 3?

A: Recent advancements in the layer 1 blockchain protocol Ethereum have produced what is now referred to as the Ethereum Merge. Vitalik Buterin, the creator of Ethereum, may have suggested a layer 3 general discussion about plans to implement its solutions on the Ethereum blockchain. 

Ethereum has announced plans for greater scalability and is presently working on developing a layer 2 blockchain protocol.