Are L2s Ethereum?

Ethereum has been in hot water lately.

Sentiment is down, and critics have been quick to point out ETH's underperformance against SOL while largely attributing this to a perceived loss of mindshare and users to L2s.

This narrative has sparked a crucial debate: Are L2s Ethereum? The answer, as with most things in crypto, is a delightful mix of mess and simplicity. So, let’s take a closer look at both sides of this argument and explore the relationship between Ethereum and L2s. 👇

Symbiotic or Separatist?

L2s have been a core component of Ethereum's rollup-centric roadmap from the very beginning. They were envisioned as extensions (technical and cultural) of Ethereum, designed to expand its capabilities and attract a broader user base.

At their core, L2s are deeply linked with Ethereum. They share its DNA — relying on ETH as the currency, benefitting from Ethereum's security blanket, and utilizing it for data storage and settlement. It's like a startup leveraging its parent company's infrastructure and brand recognition, a win-win for both.

The symbiotic relationship between L2s and Ethereum is undeniable. L2s thrive on Ethereum's infrastructure and security, while Ethereum benefits from the increased activity and increased demand for ETH, making it a better store of value.

By offering lower fees and faster transaction times, L2s have made it easier for developers to build different types of applications. Look at the explosion of memecoins on Base or the rise of SocialFi platforms like Farcaster creating new markets for users.

Beyond that, L2s are becoming major hubs for DeFi activity, and ETH, the asset, is at the heart of this ecosystem. Look at the numbers: Arbitrum, Optimism, Base — these chains are dominated by ETH-related assets. 

Vampire attack?

However, one of the primary arguments against the rollup-centric approach to scaling Ethereum is the assumption that L2s may not continue to rely on Ethereum. Sure, L2s and Ethereum seem like a happy family now. But what if L2s build their own empires and ditch Ethereum altogether? No more relying on Ethereum for security, no more ETH as gas, not even needing Ethereum's block space.

This "L2s go rogue" fear is a legitimate concern. Technically, they could build independent ecosystems with their own validators as they would then be able to own the entire modular blockchain stack. So, is this the future – a messy breakup between L2s and Ethereum? Not necessarily. 

Creating a new ecosystem or launching another L1 blockchain is a complex and resource-intensive endeavor. Bootstrapping a validator set is a significant undertaking, and building a new L1 would likely result in encountering the same scalability challenges that Ethereum currently faces. If L2s had intended to pursue these paths, they would have likely done so from the outset.

A recipe for fragmentation?

Instead, L2 builders are playing a different game. Their primary focus is on scaling transactions, attracting developers, incentivizing them to build apps for different use cases, and onboarding new users to crypto, while Ethereum handles the security and decentralization problem.

But, this doesn’t mean that there are no foreseeable problems with the way the L2 landscape is shaping up. It's a strange paradox. On one hand, the proliferation of L2s is a testament to the success of the rollup-centric roadmap. But on the other hand, it's a recipe for fragmentation.

We can all agree that there are perhaps a few too many L2s. Too many copycats. Too little differentiation. It's like a thousand startups chasing the same market, all promising the same thing. This isn't healthy.

What we need are L2s that matter. L2s that offer something unique, something that sets them apart. Security, app diversity, GTM strategy — these are the areas where we need to see real innovation.

And let's not forget the bigger picture. As Ethereum scales with these L2s, we need to ensure that it still feels like Ethereum. We need to avoid the trap of fragmentation, where everyone is pulling in their own direction.

L2s need seamless connectivity. Teams are launching tech stacks that allow the development of a unified network of chains that share resources and offer users a more seamless and quicker experience – Superchain, AggLayer, Elastic Chain, Orbit Chains are all promising initiatives in this direction.

But we must be wary of ‘echo chambers’. These zones of chains should not become isolated universes. A healthy L2 ecosystem is one where chains work together, not in isolation. We need bridges, not moats. 

We need collaboration. We need communication. We need education. We need incentives. We need to build shared infrastructure and standards that foster seamless connectivity across L2s. Only then can we truly win together.

Closing Thoughts

You can say that L2s aren’t Ethereum. You can argue L2s aren’t even extensions of Ethereum. But you cannot deny the fact that L2s enhance the utility of Ethereum and ETH.

The "L2s vs. Ethereum" debate is a false dichotomy. This isn't a zero-sum game. Ultimately, Ethereum and L2s are in this together. Let's build a future where Ethereum and L2s thrive as a symbiotic whole, and push the crypto ecosystem forward.