Probable pseudophosphatase required for the oocyte-to-zygote transition during which it regulates the polarized dispersal of the cortical actin cytoskeleton, the synthesis of the eggshell chitin layer and the formation of the polar bodies after meiosis I and II (PubMed:17869112). Acts as scaffold to tether kinase mbk-2 and pseudophosphatases egg-4 and egg-5 to the oocyte cortex and thus restricts mbk-2 activity to the cortex during meiosis I (PubMed:17869113, PubMed:17869112, PubMed:19879842, PubMed:19879147). Regulates mbk-2 localization to cytoplasmic foci during meiosis II (PubMed:17869113, PubMed:17869112). Also required for chitin synthase chs-1 localization to the cell cortex of unfertilized oocytes and to cytoplasmic foci in the fertilized embryo (PubMed:17869112). Part of a complex, consisting of pseudophosphatases egg-3, egg-4, egg-5 and kinase mbk-2; this complex is required for the oocyte-to-zygote transition (PubMed:19879842, PubMed:19879147). Interacts (via tyrosine-protein phosphatase domain) with kinase mbk-2 (via N-terminus); the interaction does not affect mbk-2 kinase activity, is enhanced by mbk-2 tyrosine phosphorylation status and requires prior binding of mbk-2 to egg-4 and egg-5 (PubMed:17869113, PubMed:19879842, PubMed:19879147). Interacts with egg-4 (PubMed:19879147). Co-localizes with mbk-2 to the oocyte cell membrane during most of meiosis I, relocalizes to subcortical foci during anaphase I which become cytoplasmic during meiosis II (PubMed:17869113, PubMed:17869112, PubMed:19879842). At the end of meiosis II, egg-3 is degraded releasing mbk-2 in the cytoplasm (PubMed:17869113, PubMed:17869112, PubMed:19879842). Co-localizes with egg-4 to the cell cortex in developing oocytes and in newly fertilized embryos (PubMed:19879147). Cortical localization in developing oocytes is egg-1, egg-2 and chs-1-dependent (PubMed:17869112, PubMed:20971008). Co-localizes in the fertilized egg with chs-1 to cytoplasmic foci (PubMed:17869112). Expressed in oocytes during meiosis I and II followed by proteasomal degradation at the 1-cell and 2-cell embryonic stages (at protein level). The N-terminal destruction box (D-box) motifs 1 and 2 act as a recognition signal for degradation via the ubiquitin-proteasome pathway. RNAi-mediated knockdown causes hermaphrodite sterility characterized by the production of oocytes lacking an eggshell (PubMed:17869112). Prevents the polarized dispersal of cortical F-actin following oocyte fertilization without affecting the formation of the F-actin cap (PubMed:17869112). Impairs egg-4 and egg-5 cortical localization in oocytes (PubMed:19879147). Causes a loss of kinase mbk-2 cortical localization in oocyte in meiosis I (PubMed:17869113, PubMed:19879842, PubMed:19879147). RNAi-mediated knockdown in a mat-1 (ax227) mutant background, restores mbk-2 cytoplasmic relocalization and mbk-2-mediated degradation of pos-1 and mei-1 (PubMed:17869113). Simultaneous RNAi-mediated knockdown of mat-1 causes polyspermy and a failure to internalize egg-1 after oocyte fertilization (PubMed:20971008). Belongs to the protein-tyrosine phosphatase family. Although the active site Cys-452 is conserved, another important catalytic site, 'Arg-458', is replaced by a Lys residue suggesting that egg-3 may lack catalytic activity. Despite the lack of catalytic activity, egg-3 may retain the capacity to bind to phosphorylated substrates.