L3s Explained Like I’m Five

L3s have seen explosive growth over the past few months, and many are starting to gain an appreciation for them.

Ethereum L1 + L2s + L3s will enable teams to bring more people onchain than ever before.

Here’s an overview of L3s and why they’re useful for those who are confused.

An L3 is an appchain that settles to an L2.

L3s have an isolated state environment and fee market, letting them scale further while being interoperable with the L2 economy.

They’re like onchain connected servers/databases that inherit L2s’ payments, identity, and trust infra.

L3s make it 100x cheaper and faster to onboard users/assets via L2.

If you launch a new L2, users need to go from a CEX to Ethereum L1 to your L2 (two L1 txs).

If you launch a new L3, users can go from a CEX to a major L2 with direct exchange support to your L3 (two L2 txs).

L3s post updates/data to Ethereum L1 at much lower costs via L2.

For a major L2 with high tx volume, the fixed costs of posting to L1 get amortized away, but not for a new L2 with low tx volume.

For new L3s, they get to post to an L2 which incurs the costs of posting to L1.

L3s give developers dedicated blockspace vs. L2.

On general-purpose L2s, global fee markets and limited blockspace mean that congestion will always lead to issues for the rest of the network.

On your own L3, you have dedicated blockspace, which is a proxy for fee isolation.

L3s give developers more configuration vs. L2.

There are many different ways to configure an L3 with alt-DA for cheap fees (e.g. Celestia, EigenDA, Avail), VMs for speed or security (e.g. SVM, MoveVM, parallel EVM), etc.

There’ll be tons of experimentation at L3.

L3s enable developers to leverage L2 distribution channels.

L3s can massively benefit from the underlying L2 by easily plugging into its existing users, liquidity, and assets.

This reduces your acquisition costs and gets you direct access and interoperability with an ecosystem.

You can deploy an L3 today in just a few clicks with existing rollup frameworks and RaaS platforms.

Rollup frameworks: Arbitrum Orbit, OP Stack, Polygon CDK, ZK Stack

RaaS platforms: Conduit, Caldera, Gelato, AltLayer, Lumoz, Snapchain, Ankr, Zeeve

The L3 landscape is growing rapidly.

Arbitrum: XAI, Deri Chain, Meliora, Superposition, Syndr, Molten Network, ApeChain, Avive World, Fiefdom, Orb3Tech, PlayBlock, PMON Chain, Proof of Play Apex, Sanko, TreasureChain: Infinity Chains, AnimeChain, Hook Chain, Muster, Oursong, RARI Chain

Base: Degen Chain, Gold, Stack, Gotchichain, HAM Chain, PengChain, Onchain

Multichain: zkLink Nova

A few years ago many said L2s were pointless, and today many are saying the same about L3s.

L2s and L3s are just blockspace under the hood, and blockspace is the next generation of compute.

Similar to how we don’t know whether we’re running on AWS or GCP, soon we won’t know what blockspace we’re running on.