In a recent post on X, Polygon Labs CEO Marc Boiron criticized Layer 3 (L3) networks on the Ethereum blockchain, claiming that they are unnecessary for scaling the network and only serve to drain value from the mainnet. Boiron expressed skepticism about L3 networks, stating that Polygon Labs does not work on L3s because they are not essential for scaling existing networks and exist only to take value away from Ethereum and onto the L2s on which the L3s are built. His comments have sparked a debate within the industry, with some arguing that L2s on Ethereum are valuable to the network but disagreeing with Boiron’s assertion that L3s take value away from Ethereum.
Layer 3 protocols operate on top of L2s and provide application-specific decentralized applications with enhanced scaling, performance, interoperability, customization, and cost-efficiency. The L3 ecosystem includes various solutions from L2 networks such as Orbs, Xai, zkSync Hyperchains, and the recently launched Degen Chain on Arbitrum Orbit. Despite growing interest, the L3 sector remains relatively small, with only four L3 tokens listed on CoinGecko. Peter Haymond of Offchain Labs highlighted the benefits of L3s such as low-cost native bridging from L2, cost-effective on-chain proofs, custom gas tokens, and specialized state transition functions.
Patrick McCorry, a researcher at the Arbitrum Foundation, argued that L3s offer compelling advantages, including allowing L2 networks to become settlement layers and leveraging Ethereum as a global ordering service and final judge of settlement. The recent launch of the Degen Chain network on Arbitrum Orbit has added momentum to the debate. Built by infrastructure provider Syndicate, Degen Chain is a specialized ultra-low-cost network for the Degen token ($DEGEN) and functions as a Layer 3 network, or L3. Early adopters of Degen have seen substantial profits, with one trader who initially invested less than $7,000 walking away with over $2 million in profits. The adoption of Degen as one of the first L3 chains to gain significant traction is noteworthy.
The debate surrounding L3 networks continues, with some arguing that L3s offer significant advantages without depleting Ethereum’s value, while others, like Marc Boiron, maintain that L3s are unnecessary for scaling existing networks. Boiron emphasized that Polygon Labs does not oppose the development of L3s on other networks but aims to scale Ethereum while ensuring fair value distribution between Polygon and Ethereum. The benefits of L3s include enhancing performance, scalability, interoperability, and customization for decentralized applications, with potential advantages for L2 networks to become settlement layers and rely on Ethereum as a global ordering service and final judge of settlement. The recent launch of Degen Chain on Arbitrum Orbit has showcased the potential for L3 networks to gain momentum and offer specialized, low-cost solutions for specific tokens and applications.
