Layer 2 networks are still in their early stages of development and many products are being tested as of the time of writing. However, Buterin is already envisioning the future of the network and outlined some of his ideas regarding the functionality of layer 3 solutions that could significantly expand the network and provide more utility to users and developers.
Rollups have their limitations
The idea of rollups is great for scalability and expansion. In essence, rollups are bundles of multiple transactions that are computed elsewhere and provide the layer 1 network with a simple cryptographic proof of transaction that can be implemented in the network without using space and consuming the computational power available to the L1 mainnet.
However, further scalability is close to impossible with this concept. Buterin argues that ideas like stacking rollups are an inherently inefficient approach to the problem of scalability as any method of data compression that will be used to roll up a rollup could be implemented during the first compression and avoid unnecessary complications.
The proposed solution from the founder of the Ethereum network is using layer 3 as a destination for utilitarian functionality that would provide additional features to decentralized apps working on layer 2 networks. Layer 3 apps could focus on making transactions safer, changing the functionality of underlying rollups, introducing new ways of handing data, and providing other ways to further increase scalability and reduce transaction fees.
Is it too soon to talk about L3?
The crypto community loves insights provided by Vitalik Buteriin, but this particular post was met with mixed feelings after the market reaction to the recent merge. The overhyped event caused a dip in the ETH price. Investors are moving away from Ethereum and focusing on Bitcoin. Competing networks like Cardano and Algorand gain traction.
It is not the best timing to talk about layer 3 solutions when the future of layer 2 is questioned by users, developers, and investors. The question is also Ethereum compete with layer 1 networks like Algorand that already can handle 6,000 transactions per second?
