Xai, a New Ethereum L3 Solution, Breaks TPS Record

On June 16, Ethereum’s scaling networks, including layer-2 (L2) and layer-3 (L3) solutions, reached a combined 245.87 transactions per second (TPS)

Ethereum (ETH) layer-2 (L2) and layer-3 (L3) scaling solutions reached a combined 245.87 transactions per second (TPS) on June 16, enabling nearly 21.2 million transactions to be processed in a single day, according to data from L2beat.

This surge in TPS was largely driven by Xai, a new L3 solution that runs on Offchain Labs technology, which is also used to power Arbitrum One. Xai is designed to cater specifically to gaming applications.

Starting June 12, Xai saw a gradual increase in TPS, rising from one transaction per day to 101.72 TPS by June 16. This marks the highest daily TPS among all L2 and L3 solutions within the Ethereum network. Following Xai, Base registered 32.97 TPS, while Arbitrum recorded 20.65 TPS on the same day.

XAI Performance, Total Value Locked Compared

Despite the high TPS, Xai's total value locked (TVL) is still relatively low at $1.33 million, compared to Arbitrum One's $17.78 billion and Base's $7.54 billion. Xai's recent performance also breaks the previous TPS record set by Degen Chain within the ecosystem.

L3 Technologies' Role, Potential

L3 technologies are designed to further enhance blockchain scalability by anchoring into L2 for security. In a 2022 blog post, Ethereum co-founder Vitalik Buterin discussed the potential role of L3 technologies.

According to Buterin, L2 is primarily concerned with scaling, while L3 offers customized functionality, such as privacy. He noted that L3 could include applications using different computation methods or rollups optimized for specific data formats.

Buterin also highlighted the possible role of validiums, which use SNARKs to verify computations and rely on trusted third parties for data availability.

"In this vision, there is no attempt to provide ‘scalability squared’; rather, there is one layer of the stack that helps applications scale, and then separate layers for customized functionality needs of different use cases," Buterin wrote.

Industry Reactions to L3

There have been mixed reactions within the industry regarding L3 technologies. Marc Boiron, CEO of Polygon Labs, has expressed concerns that L3 could ultimately siphon value away from the Ethereum ecosystem and toward the L2s they build upon.

Despite differing opinions, the discussion around L3 is a significant topic within the decentralized finance (DeFi) industry.