Are layer 2s good for Ethereum, or are they ‘extractive?’
Layer 2 (L2) solutions have successfully alleviated congestion on the Ethereum mainnet, reducing gas fees while maintaining security. However, concerns have arisen that L2s may be siphoning off transaction fees from Ethereum, particularly sequencing fees. Critics argue that Ethereum should adopt a more aggressive revenue strategy. The Dencun upgrade in March 2024 enhanced L2 profitability, leading to significant revenue for L2s like Base, which earned approximately $98 million while paying only about $4.9 million to Ethereum. Proposals for a "tax" on L2s could hinder competitiveness and contradict Ethereum's decentralization ethos. Some suggest transitioning to "based rollups," where transaction sequencing occurs on the mainnet to enhance security. Collaborative efforts among Ethereum developers aim to address L2 interoperability and decentralization challenges. Despite current fee imbalances, future upgrades may improve revenue capture for Ethereum. The ecosystem remains robust, with Ethereum still leading in DeFi and stablecoin activity.
