Yellow Launches Layer-3 Network to Solve DeFi Liquidity Gap

- Launch of Yellow’s Layer-3 network backed by a $10 million seed round led by Ripple’s Chris Larsen. - New chain-agnostic infrastructure to address liquidity fragmentation and optimize scalability. On October 8, 2025, Yellow announced the launch of its groundbreaking Layer-3 clearing network, designed to transform decentralized finance (DeFi) by tackling liquidity fragmentation across blockchain ecosystems. The infrastructure, which builds on off-chain state channels inspired by Bitcoin’s Lightning Network, reduces cross-chain friction, enhances capital efficiency, and drives real-time financial interactions. With these advancements, Yellow positions itself as a cornerstone of Web3 financial infrastructure, akin to SWIFT in traditional finance. According to reports from Altcoin Buzz and The Block on October 8, 2025, a $10 million seed investment is fueling the network’s development. The investment, led by Ripple co-founder Chris Larsen and other institutional contributors, emphasizes the growing confidence in Layer-3 solutions to overcome the scalability and interoperability challenges that hinder Layer-1 and Layer-2 protocols. Yellow’s chain-agnostic clearing network aims to unify fragmented blockchain liquidity by resolving issues such as isolated asset pools, high transaction fees, and vulnerabilities in bridging mechanisms. By using off-chain trade batches and settling net outcomes on-chain, the network can achieve throughput capabilities of billions of off-chain messages daily, surpassing current Layer-2 performance benchmarks. State channels form the technical foundation, enabling rapid cross-chain interactions through virtual high-speed ledgers. Participants open channels using collateral locked in smart contracts, which facilitates real-time off-chain liability updates. To ensure synchronization and security, the system records periodic net settlements on base blockchains. Key components like the Nitrolite Framework, ClearNodes, and NeoDAX strengthen transaction speed and modular infrastructure, making the network versatile for various applications. These applications include gaming environments that require instant responsiveness, cross-chain payment systems, and enterprise solutions that integrate crypto capabilities into Web2. In addition, the YELLOW token incentivizes the economic model, as brokers lock this token as collateral and pay clearing fees on net settlements to ensure system integrity. As of October 8 at 16:08 UTC, XRP (XRP)—the digital asset connected to Ripple—was trading at $2.868. Based on current market data, this price marks a -0.453% change in its 24-hour trading volume.