Vitalik Buterns reveals Layer-3s to have “bigger role” as Layer-2 scaling ecosystem matures

Blockchains are usually referred to as either a Layer-1 or Layer-2 solution. Layer-1s are the base layer of an ecosystem such as Ethereum, Cardano, or Solana. Layer-2 solutions are anchored to Layer-1 blockchains and provide scalability.

Layer-3s can also exist; however, you cannot stack another layer on top of Layer 2 to add even more scalability, Ethereum founder Vitalik Buterin wrote in a blog post on Sept. 17.

There are several challenges with stacking two similarly designed layers on top of each other, Buterin wrote. For instance, limits to data availability and reliance on Layer-1 bandwidth for emergency withdrawals can hinder the stacking of two layers.

Buterin said that rollups on top of rollups could not provide higher scalability than Layer-2 solutions. Rollups compress the amount of data a transaction needs to store on the Layer-1 blockchain to ensure the transaction can be accessed and verified.

In the case of a simple token transfer, the data is reduced from 100 to 16 bytes. For ZK-SNARK transactions that preserve privacy, transaction data is compressed from 600 bytes to 80 bytes, Buterin said.

But data can only be compressed once, Buterin wrote. If further compression is possible, the logic of the second compressor can be integrated into the first so that the data can be compressed just once with the same results. This is why rollups on top of rollups cannot “provide large gains in scalability,” he wrote.

Three visions of L3 use-cases

StarkWare, which operates StarkNet, a ZK-rollup that serves as a Layer-2 Ethereum scaling solution, laid out three different visions of how Layer-3s could be used.  Buterin considers all three visions as “fundamentally reasonable.”

In the first scenario, Layer-3s can be used for customized functions such as privacy. The aim would not be to provide additional scalability in such a case. The Layer-2 would provide scalability to applications, and a Layer-3 would serve the customized functionality needed for different…