Degen Chain, a layer-3 blockchain built on top of the Base network, has experienced a significant surge in transactional volumes, reaching nearly $100 million within just 24 hours of commencing operations. The network, which launched four days ago, has witnessed over 272,000 unique transactions, with over 7,500 contracts and 2,300 tokens created. However, many of these tokens are associated with rug pulls or scams, indicating the speculative and risky nature of the current cryptocurrency landscape.
The Degen Chain is specifically tailored for the DEGEN token and utilizes layer-2 protocols for faster transactions and targeted applications. A layer-3 blockchain is customizable and application-specific, built on top of layer-2 protocols to efficiently complete tasks such as payments, gaming transactions, and other functionalities. The DEGEN token acts as the native gas token for fee payments within the chain, enabling various experiments like tipping, community rewards, gaming, and more. Despite market capitalizations of many tokens being under $1 million, they mainly serve as speculative investments, with tokens like Degen Swap (DSWAP) and Degen Easter Eggs (DEE) gaining traction on the network.
Critics argue that layer-3 networks like Degen Chain may not be necessary for scaling Ethereum and could drain value from the mainnet. Polygon CEO Marc Boiron’s comments on L3 networks have sparked debate within the blockchain community, with some suggesting that L3s exist solely to divert value away from Ethereum and onto the L2s on which they are built. Boiron emphasized that too many L3s settling on one L2 could potentially diminish Ethereum’s value and security, challenging the notion that L2 value is equivalent to Ethereum value.
Despite Boiron’s perspective, others in the community see benefits in L3s that are independent of Ethereum’s value, including low-cost native bridging from L2s, on-chain proofing, custom gas tokens, and specialized state transition functions. While Boiron focuses on scaling Ethereum and maintaining fair value distribution between L2s and the mainnet, some, like Ethereum co-founder Vitalik Buterin, view L3s as potentially offering unique functionalities that complement L2s rather than competing with them directly. The ongoing debate highlights differing opinions on the optimal strategies for blockchain scalability and application development.
