Nested Blockchain Meaning

A Nested Blockchain refers to a hierarchical blockchain architecture where one chain operates "on top of" another. This is most commonly seen in Layer 3 solutions.

In this setup, a Layer 3 application-specific chain (like a gaming chain) runs on top of a Layer 2 scaling solution (like Arbitrum), which in turn runs on top of the Layer 1 settlement chain (Ethereum). The "Child Chain" (the nested chain) relies on the "Parent Chain" for security and finality.

It executes transactions quickly and cheaply in its own environment but periodically submits a "Proof" or a bundle of data to the parent chain to anchor its state. This nesting allows for "Fractal Scaling." Just as a website runs on a server, which runs on an OS, which runs on hardware, blockchains are developing a stack.

This allows the nested chains to be highly customized (e.g., zero gas fees for players) without having to bootstrap their own validator set from scratch, as they inherit the security of the layers beneath them.