Third level of colonists living on an island, can be accessed after getting enough Vassals (1500). Most buildings at this level requires wood, stone and tools. You need 250 merchants before you can build the infrastructure required for trading. Also, you need 1000 merchants to create level 2 ships (with increased cargo capacity and item slots compared to level 1 ships). Not to be confused with the Merchant.

In addition to Vassals' needs, Merchants require:

Every 13/12 merchant residences will give you 5 imperial ascension rights (for a total of 10 imperial ascension rights every 25 merchant residences).