To further contextualize this article, we recommend that you first read our articles on the First Layer of a Blockchain and the Second Layer of a Blockchain, in order to correctly follow the topic of the different layers that make up a Blockchain, this time we will delve into the third level of application in a Blockchain protocol.
As we already mentioned in previous articles, each layer plays an important role within the technological structure of a Blockchain network; level 1 being the technological base where the entire system is supported, level 2 helps with the management and improvement of some features of level 1, and finally level 3 is in charge of allowing users to use tools and applications Developed to operate securely on a Blockchain.
The layer 3 protocol is also known as the decentralized application layer. Thanks to this sublevel, protocols oriented to the development of decentralized applications can be executed, as well as the execution of said applications. For this application to work correctly and securely, use is made of the other layers present in a Blockchain (Layer 1 and Layer 2).
Since decentralized applications are created from the use of smart contracts, oracles, cryptographic security, and programming languages that offer levels 1 and 2 of a Blockchain.
Just like layer 2 applications that are subdivided into two types of solutions, in layer 3 decentralized applications we can also find them in two subcategories that work together and are called, app and execution solutions: the functionality of these applications will depend on the development of said Dapp and the orientation given to the project or application.
Application solutions are those that deal with the communication between the parts of the system, that is, they are user-oriented applications that facilitate the interactions of a user with a chain of blocks. The main components of these solutions are the communication through APIs, the different scripts used and the development of UI user interfaces.
The solutions of execution found in layer 3 are the ones that manage the rules programmed within the application code and allow the management of smart contracts. Basically in this sublayer we find the essence of any Dapp which is the code.
Within layer 3 applications we can find a very large range of applications that can offer different types of solutions, for example DeFi applications that are specialized apps in decentralized finance, aimed at users who want to enter the Crypto asset market; We can also find applications with very varied functions such as Crypto games or more complex ones such as decentralized exchanges.
Also called decentralized applications or Dapps, these operate on layer 3 of a Blockchain, allowing the user to perform any type of function that is embedded within the application code. Due to the vast universe of applications that can be created with this layer, we will take a look at the most used or important decentralized applications in the Dapp ecosystem.
The MakerDao decentralized platform is one of the pioneering Dapps of Ethereum, its main function is to serve as a lending platform for its users, it makes use of the Ethereum Blockchain network to verify and validate their transactions using the different layers of said chain of blocks, consists of offering loans in a stable token called DAI that has a 1:1 parity against the dollar, for which users must leave a guarantee in some crypto assets that will be stored in a complex system of smart contracts, once the payment is settled the user will be able to release the Cryptocurrencies that he had previously deposited.
Uniswap is one of the largest and most used decentralized exchanges in the Cryptocurrency market, basically its main function is to serve as a platform that offers the same services as an exchange but without having a central body that controls the system or policies of the platform, that is to say, being a totally decentralized platform. Uniswap allows trading of the entire ERC-20 standard, its main attraction is its low commissions since being an application hosted within the Ethereum network itself, it is very sustainable thanks to the smart contracts it has.
It is a platform that allows communication between other DeFi Dapps, it is hosted within the Ethereum Blockchain and helps its users to generate value with their Cryptocurrencies through strategies such as staking, among others. The main product of this platform are vaults, where users can store their crypto assets and obtain a return in exchange, they also have other products such as Earn, Zap, yInsure and StableCredit that further expand the opportunities for their users to interact with DeFi apps.
In its time it was a very famous Dapp since it was one of the first Crypto games to be successful in the media, its main function was to allow its users to earn profits while playing. CryptoKitties was very popular since the tokens could be exchanged for fiat money, and basically this is what the game is about, a user raises some cats (tokens) to the point where these cats would obtain a kitten (another token) with unique attributes and unrepeatable, and if the user wished, he could sell this baby to another person and thus obtain returns.
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Of course, many of these help and contribute to the growth and development of the Crypto asset ecosystem, as well as improve and give new tools to Cryptocurrency traders.
Layer 3 functions or layer 3 applications can be identified in a very easy way, if the tool used is identified or meets the characteristics of a decentralized application, it means that said tool operates on the third layer of a Blockchain.
Today there are many more Cryptocurrencies or Blockchains that have the technological scope to develop decentralized applications or Dapps in their third application layer, but without a doubt currently the cryptocurrency that has contributed the most to this development has been Ethereum along with its ERC-20 standard.