I guess it serves the function of an L2/sidechain by taking transactions off-chain, but its like an L3 because the custodian like Coinbase or gemini the first layer, they're just creating another secondary market, pointing to bitcoin, if anything an ETF is like a BRC-20 token, sure theres some Bitcoin on-chain representing it, but theres several 3rd party indexers in between doing the management

I like to think of it as a social layer, to me an uncle jim node is a social layer, you agree with a 3rd party and you have a contract and would need to go the legal route for disputes since don't have ties to the chain in some way to settle the dispute