Ethereum : Vitalik Buterin speaks out on the Layer 3 thesis

The Ethereum network is a cradle of innovation. However, the blockchain has many limitations, especially in terms of scalability. Therefore, many initiatives have emerged to improve performance such as the these of Layer 3.

Among these initiatives, the second layer solutions are those that have obtained the most enthusiasm. In practice, Layer 2 aims at moving part of the transactions and logic out of the main Ethereum chain to chains evolving above the network.

Definitions

The cryptocurrency industry is constantly evolving and the term layer in crypto has been on everyone’s lips recently. In the world of blockchains and cryptocurrency, a “Layer” is simply translated into French as couche. These successive layers will group together a set of components and allow, if necessary, to create a higher level layer, while using the components of the layer on which it is based.

Finally, what we call layer 3 or the 3rd layer is the application layer. This is the user interface with which we actually interact. We find on this 3rd layer various DApp (decentralized applications) like :

• Uniswap
• PancakeSwap
• MakerDAO

With an increasing amount of developers in the crypto ecosystem, new alternatives are being developed every day. Layer 3 is one of these alternatives that want to make interoperability (communication) between the lower layers easier and more accessible.

As the solutions provided by L1 and L2 are closely related, the creation of interoperability protocols on a new layer avoids making these developments even more complex. Layer 3 protocols are therefore a way to simplify all the lower layers.

The L3 will have the role of messenger between layers 1 and 2 by ignoring most of their differences in operation.

To make it simple, layer 3s will inherit the security of layer 2s which in turn inherit the security of Ethereum.

However, while these solutions may be useful in some cases, they are not suitable for all situations. This is what Vitalik Buterinle, co-founder of Ethereum, recently tried to demonstrate in an article on his personal blog.

The limits of layer 3: the data problem

Vitalik Buterin loves the idea of layer 3. However, he has identified some limitations to this architecture.

Indeed, layer 2s such as Rollups allow to solve scalability on two levels. On the one hand, at the level of the calculations to be carried out and on the other hand, at the level of the data management.

Thus, SNARK proofs of fraud allow to reduce the calculations. They rely on a very small number of actors to process and verify each block. This allows the rest of the users to perform only a tiny amount of computation.

“These systems, especially SNARKs, can scale almost without limit; you can simply create ‘a SNARK within a SNARK’ to further reduce the number of computations to a single proof.”

However, the situation is not so rosy on the data management side. Indeed, Rollups use various compression techniques to reduce the amount of data stored on the chain. However, they must also ensure that the data is available at all times so that users can access it to check the status of the rollup. Unfortunately, unlike computation, data compression cannot be repeated over and over again.

“Data can be compressed once, but it can’t be compressed again. If this is the case, there is usually a way to integrate the logic of the second compressor into the first and get the same benefit by compressing only once. Therefore, “rollups on rollups” are not something that can really provide significant gains in scalability.”
Nevertheless, Vitalik Buterin underlines the interest of these layer 3 in some specific use cases. In order to support his statement, he relies on the research conducted by the teams of Starkware, the company behind the second layer solution Starknet.