Layer-3s are a necessary innovation in crypto

The following is a guest post from Rob Viglione, CEO at Horizen Labs.

If we had stopped at dial-up internet, wed never have gotten Netflix, real-time gaming, or cloud computing. The evolution of internet infrastructure paved the way for mass adoption. In the same way, Layer-3s are an inevitable evolution of blockchain infrastructureremoving friction, lowering costs, and making blockchain truly ready for mainstream users. Yet, critics continue to argue that they add unnecessary complexity.

This debate about the role of Layer-3s is an active one for us at Horizen Labs. The Horizen DAO has recently passed a vote to join the Base ecosystem, a pivotal governance decision that marks the beginning of Horizens transition to Base, Coinbases Layer 2 network, as an appchain specialized in privacy-preserving applications. Were convinced by the Layer-3 thesis and believe that Layer 3s represent the next evolution in blockchain scalability.

Horizens move to Base isnt just about following trends, its about recognizing that a more modular, interoperable blockchain stack is the key to driving real-world adoption. Were not just theorizing; were building.

The History

For crypto to reach a billion users, transactions need to be fast, cheap, and seamless. Layer-3s arent an academic exercisetheyre a practical response to the fact that even Layer-2s arent cheap enough for mass adoption. Layer-3s also optimize for special features that are not currently possible on Layer-1s and Layer-2ssuch as enhanced ZK capabilities.

Fundamentally, Layer-3s address a core problem: If Ethereum (Layer-1) is expensive, Layer-2s help by processing transactions off-chain and only committing final state proofs to Layer-1. Layer-3s take this further by settling on Layer-2s instead of directly on Ethereum, creating a hierarchical model that minimizes costs at each level.

Layer-3s emerged naturally as blockchain architects sought greater efficiencies. StarkWare first outlined the concept in late 2021 under the term fractal scaling. Vitalik Buterin explored Layer-3 designs in 2022, suggesting specialized purposes beyond simple scaling. By 2023, major Ethereum scaling teams began implementing Layer-3 frameworks. Arbitrum introduced Orbit for launching Layer-3 Orbit chains. Matter Labs released ZK Stack for building zk-rollups as either Layer-2s or Layer-3s. These developments have pushed Layer-3s from theory to practice.

Not Everyone Is a Fan

Critics argue several points against Layer-3s: many believe Layer-2 solutions havent reached full maturity yet, and making Layer-3s is premature. Some argue Layer-3s add complexity. But great technology is about making complexity invisible to usersjust like the internet did. Some view Layer-3s as redundant, arguing their goals could be achieved by optimizing Layer-2 solutions.

However, a crucial realization is emerging that makes Layer-3s even more timely: even Layer-2s, built to enable faster, cheaper transactions, might still fall short.

In some cases, a Layer-3 can abstract costs even further, ensuring near-zero gas fees. This cost abstraction is vital. Blockchain adoption requires transactions that are nearly free to the end user, and Layer-3s provide precisely this capability.

That brings a chain-abstracted future closer. Ultimately, that is better for onboarding new users, better for liquidity, and better for incentivizing the building of new dApps onchain. When users can transact without worrying about gas fees, adoption accelerates. Developers can build applications that wouldnt be economically viable on higher-fee networks, and liquidity flows more freely when not constrained by transaction costs. The entire ecosystem benefits.

But abstraction isnt just about cost savings; its also about usability and customization.

Customization and Connectivity

Layer-3s are also a natural response to the fear of ecosystem isolation. Chains dont want to be siloed. Standalone Layer-1 blockchains face significant challenges: they must bootstrap their own security, attract users from scratch, and build an entirely new infrastructure. Many Ethereum killers like Cardano, Fantom, or Tezos have discovered how difficult this journey can be.

Layer-3s offer an alternative path where chains can remain connected to established ecosystems while providing better customization options: this is where their true potential lies. Application-specific chains can optimize for their unique use cases, whether its zero-knowledge proofs, gaming, DeFi, social networks, or enterprise applications. They can implement custom virtual machines, consensus mechanisms, or privacy features tailored to their needs, all while staying connected to the broader ecosystem, benefiting from its liquidity and security.

This blend of customization and connectivity makes these application-specific apps excel at what they do, ultimately benefiting the end users.

A Pathway to Abstraction

People may claim that Layer-3s make web3 too complicated, but theres a good chance that it could solve its own problem. The complexity will be invisible to end users if implemented correctly.

Modern dApps can abstract away the underlying layers through smart wallet designs and intuitive interfaces. Users neednt know which layer theyre transacting on any more than internet users need to understand TCP/IP protocols. They simply experience faster, cheaper transactions, and better products.

This natural evolution in blockchain architecture is a positive step. Layer-3s balance sovereignty with interoperability. They maximize cost efficiency without sacrificing security. They enable specialized optimization while maintaining ecosystem connections. These arent just nice-to-have features. Theyre essential for blockchains to achieve mainstream adoption.

The internet didnt take off because users understood packet-switching or HTTP protocols. It took off because it just worked. Layer-3s bring us closer to a blockchain world that just worksseamless, fast, and cost-effective. And thats how crypto wins.

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