The meme coins are popping up everywhere, even on layer-3, like that of Degen Chain.
After making their debut with a layer-1 in 2013 with the native cryptocurrency of Dogecoin (DOGE), they have thrived mainly as non-native tokens, such as Shiba Inu (SHIB) on Ethereum.
Although they continue to thrive today on other layer-1s, such as Solana or Toncoin, it is on layer-2s that they are spreading more widely, due to the reduced issuance and transaction costs, and the fact that especially layer-2s on Ethereum are experiencing significant success.
But now they are also arriving on layer-3.
Summary
The boom of meme coins on Degen Chain
Just as layer-2 is based on layer-1, layer-3 in turn is based on layer-2.
In particular Degen Chain is a layer-3 released last week based on the layer-2 Base, which in turn is based on the layer-1 of Ethereum.
This is an L3 network launched by Syndicate on March 28 using Arbitrum Orbit, and aimed primarily at users of the Farcaster Web3 platform, where it offers very low-cost transactions for its own DEGEN tokens.
The Base layer-2 already has very low commission costs, compared for example to Ethereum, but Degen Chain further reduces them.
The success on the crypto markets of DEGEN has been very rapid, so much so that in just a few days its price has gone from just over 1 cent to over 6 cents, with a +320% increase in less than a week.
After reaching its peak on March 31st, the price started to decrease, and now it is at 4 cents per dollar.
The same corner on Degen
Degen Chain does not have its own stablecoin, and mainly hosts speculative tokens, such as meme coins.
His network recorded almost 100 million dollars in traded volumes in just 24 hours, with over 272,000 unique transactions. Between Thursday and yesterday, 2,300 tokens were launched on Degen Chain, although most of them seem to be scam attempts.
One of these tokens, DSWAP, is connected to the DEX built on Degen Chain, Degen Swap.
DSWAP is not a meme coin, and in theory Degen Swap should be a useful tool for Degen Chain users.
It was launched on March 31st, and its initial price was around $20. Now it has already dropped to just over $9.
A meme coin launched on Degen Chain is DPEPE (Degen Pepe) which on March 31 went from 0.3 cents to 17 cents, but then plummeted below 0.1 cents. All of this in a single day.
These are many tens of tokens exclusively speculative, if not worse.
Although they are not yet volumes comparable to those of Base, or Solana, the explosion of meme coins on Degen Chain may not be over, also because scammers are always looking for new ways to steal money from the unwary.
Layer-3
In reality, there are also many doubts about the real usefulness of layer-3.
Thanks to the Dencun update in fact the fees costs on Ethereum’s layer-2 have dropped.
For example, on Base the average cost of transaction fees has dropped below one thousandth of a dollar, and this makes it difficult to understand why there should be layer-3 with even lower costs.
It is true that for those who trade, maybe automatically, there may be some difference if they make thousands of transactions a day, but even in these cases it would still only be a few dollars a day on average.
The real reason why layer-3 are implemented is another one.
They are used to create blockchains that can quickly and verifiably complete a very specific series of activities.
While layer-2 are designed to perform any type of activity achievable with a smart contract, layer-3 are instead designed to be optimized only for specific uses.
For example, Degen Chain was specifically created for the DEGEN token, which will be used as the native token for payments on Degen Chain.
The developers of this project have stated that the specific use concerns tips, community rewards, payments, games, and more.
It is no coincidence that today Ethereum co-founder Vitalik Buterin reposted his 2022 post in which he talked about layer-3.
According to Buterin, layer-3 solutions would not bring significant improvements, except for reducing some fixed costs such as deposits and withdrawals. He also pointed out that there are other potentially “lighter” ways to achieve the same savings.
Moreover, what is happening on Degen Chain seems to suggest that there are other true motivations behind such projects, and perhaps they have to do with the possibility of easily putting hundreds or thousands of worthless tokens on the market.
