Anybody involved with the cryptocurrency industry would have definitely come across the terms ‘Layer 1 and 2’ at some point or the other. To this point, while Layer-1’s (L1) are primarily used to describe the central blockchain architecture of a particular project (eg. Bitcoin, Ethereum, etc), Layer-2’s (L2) are overlaying systems built on top of an underlying blockchain.
An example of this is Bitcoin and the Lightning Network (LN) wherein the former is the base layer (i.e. Layer-1) while the latter has been designed atop the Bitcoin ecosystem, allowing the project to reap a host of operational, functional benefits in the process.
That being said, in recent years the idea underlying ‘Layer 3’ (L3) solutions have started to gain a lot of mainstream traction. To put it simply, Layer-3 platforms are meant to “supercharge individual blockchains” by providing them with various utilitarian benefits including improved cross-chain capabilities.
Since, more often than not, L2 and L1 solutions are closely intertwined with one another, a growing list of peripheral solutions have emerged recently that have helped advance the idea of promoting interoperability using a separate different layer. Therefore, L3’s can be viewed as protocols that have the power to simplify the operational utility of all the other layers involved. They act as messengers between L1 and L2 systems while mitigating the operating differences between the two.
Layer-3’s are becoming increasingly necessary… Here’s why
As noted previously, L3 solutions aim to empower different stacks, layers by helping them communicate and interact with one another seamlessly. Therefore, they allow for optimized data execution as well as a high degree of cross-chain interoperability in a manner that is completely decentralized, i.e. without the need for any centralized custodians, intermediaries, or other third parties.
In this regard, Orbs can be thought of as an open, public blockchain infrastructure executed by a secure network of permissionless validators using a Proof-of-Stake (PoS) consensus mechanism. It is a separate decentralized execution layer operating between existing L1/L2 solutions and the application layer of a tiered blockchain stack.
To put it another way, Orbs serves as a “decentralized backend” that helps maximize the functional capabilities of existing ethereum virtual machine (EVM) smart contracts. Not only that, thanks to its interoperability framework, it helps open up a lot of possibilities by bringing together various niches’ such as NFTs, metaverse, GameFi, etc.
From the outside looking in, as blockchain-based technologies — such as Web3.0, DeFi — continue to become more and more complex, they are still largely limited by their inherent design structures. As a result,they still have to depend on digital setups that are largely centralized, which is not ideal from a security, liability and community standpoint.
The Orbs Network helps mitigate these bottlenecks by acting as a decentralized serverless cloud, allowing developers to extend smart contracts with L3 decentralized backend services. Additionally, the project’s broader vision to facilitate interoperability between different blockchains and ecosystems is made evident by the fact that it has integrated with a number of leading L1/L2 ecosystems — including Ethereum, BNB Chain, Polygon, Solana, Avalanche, Fantom and Harmony — alongside twenty odd DeFi platforms and protocols.
Other projects worth checking out in this regard include IBC, a protocol that has been built on top Cosmos’ third layer. It delivers seamless interconnectivity between connected blockchains by enabling data relay, authentication, and ordering across numerous chains, including Cosmos Hub, IRISnet, Akash, Crypto.com’s DLT network, amongst others.
Quant is another project with similar intentions. It focuses mainly on enterprise blockchains by connecting a whole host of public/private chains using its native Overledger DLT system. To date, Quant has entered into agreements with many mainstream companies including Hyperledger, Nvidia, and Oracle.
The future looks good for the digital asset industry
As we transition into a world governed quite heavily by crypto-centric technologies, it stands to reason that in the near term more and more consumer attention will gravitate towards Layer 3 technologies, especially since they stand to optimize the execution of various networks without the need for any third party solutions or external intervention. Therefore, it will be interesting to see what the future has in store for projects like Orbs, IBC, Quant that have made major strides in this regard.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
