Advanced Learning Concept: Understanding the Potential Risks of Layer-3 Protocols in Cryptocurrency

By: Eva Baxter

In the rapidly evolving crypto world, new technologies and concepts continue to emerge, constantly reshaping the landscape. One such concept is the layer-3 protocol, illustrated through the example of the newly successful Degen Chain, a layer-3 network built using Arbitrum Orbit for the DEGEN token. Although layer-3 protocols are gaining momentum, much of the crypto community is still divided on the potential risks these layers pose.

Polygon's CEO Marc Boiron, for instance, has raised concerns about layer-3 protocols possibly threatening Ethereum's security and hindering its scalability solutions. These concerns center on the idea that layer-3 networks could divert value from Ethereum to layer-2 platforms. This shift might undermine Ethereum's security, potentially sparking significant issues in the broader crypto ecosystem.

The debate doesn't end there. Blockchain expert Cygaar further adds to the discussion by shedding light on the security challenges layer-2 networks face, such as network centralization, upgradeable bridge contracts, and developing proving systems. There's a possibility that layer-3 networks could exacerbate these risks, undermining blockchain security.

Overall, as the crypto world persists in its evolution, it is clear that the dialogue around the benefits and risks of layer-3 solutions like Degen Chain is far from over. For more detailed information, you can explore here.