As the blockchain world strives to achieve the elusive "scalability trilemma" - delivering decentralization, security, and scalability all at once - a new wave of innovation is emerging that could supercharge Web3 adoption: layer 3 blockchains.

The scalability bottleneck has long been Web3's Achilles heel. While blockchains like Ethereum provide robust decentralization and security, their limited throughput means they can't handle the high transaction volumes needed for mass adoption of decentralized apps (dapps).

Enter layer 2 (L2) "rollup" solutions like Arbitrum and Optimism, which promise to boost Ethereum's scalability by processing transactions on separate chains and periodically rolling up and securing data on the main Ethereum chain. Adoption is ramping up, with over $39 billion in total value locked across L2s.

Chart: TVL of Ethereum L2s
Source: L2 Beats

But even as L2s gain traction, a new breed of blockchain is emerging that could grant even greater scalability and customization: layer 3 (L3) chains that run on top of layer 2 networks.

"Layer 3s could be Web3's next big bet," says Steven Russell, co-founder of layer 3 development platform LayerBridge. "They cut down operational and onboarding costs, giving developers more flexibility to bootstrap usage and rapidly scale."

Lowering the Barrier to Web3 Innovation

The core appeal of L3s is their potential to significantly reduce the overhead required to launch and operate high-performance blockchains.

While deploying a layer 2 chain still involves some fixed operational costs like submitting data to Ethereum, L3s offload the bulk of that burden to the underlying L2. That makes them far cheaper to launch and maintain than standalone L1 or L2 chains.

"The fixed overhead cost to operate a layer 3 is significantly less than for a layer 2," explains Russell. "Submitting data commitments to a layer 2 costs a fraction of doing so on Ethereum mainnet."

This lower barrier to entry could catalyze an explosion of innovation as developers deploy specialized, purpose-built blockchains for everything from gaming to DeFi to Web3 social platforms. Major projects are already experimenting:

Leading NFT companies like Yuga Labs and Azuki have launched dedicated L3 "Otherchains" to power their metaverse experiences atop Arbitrum.
The popular Farcaster social network has spawned niche L3 chains like DegenChain tailored for token economies and Frame Chain optimized for developer mini-apps.
DeFi protocol Injective plans to launch an L3 network this year to attract liquidity, lower fees, and reduce the supply of its native INJ token.

These custom chains can leverage L3-enabled features like alternative data availability layers and custom gas tokens. The ability to use project-specific tokens for gas fees creates tight feedback loops for driving usage and incentive alignment.

"Custom gas tokens enable concrete next steps towards building robust token economies," notes Russell. "They can subsidize fees for developers and users while bootstrapping new use cases."

Chart: Top L3 projects atop Ethereum L2s.
Source: L2 Beats

A Boost for Mass Crypto Adoption?

Beyond spawning an abundance of domain-specific blockchains, L3s could hold the key to finally delivering the scalability and usability required for mainstream Web3 adoption.

One major barrier has been the cumbersome and costly process of onboarding new users into blockchain-based applications. Today's paradigm often requires novice users to acquire niche L1 or L2 tokens just to get started with a dapp - an overwhelming experience compared to standard Web2 onboarding.

By building atop lower-cost L2 networks, L3s radically reduce these onboarding hurdles. New users can seamlessly join an L3 ecosystem for just a couple L2 transaction fees, bypassing the complexity and expense of directly interacting with base layer chains.

"With a layer 3, onboarding new users will only require two layer 2 transactions, which is a small fraction of the cost of acquiring layer 1 tokens and depositing into a layer 2," says Russell. "It presents a compelling path to bootstrap usage and adoption."

This frictionless experience could help crypto dapps finally compete with the seamless Web2 user journeys provided by Internet incumbents like Facebook, unlocking mainstream adoption.

Of course, despite their promise, L3s are still an emerging innovation battling skepticism around potential security tradeoffs and ecosystem fragmentation. But if the scalability and UX benefits prove out, they could become a core catalyst for Web3's mass embrace.

Image source: Block Magnate