Will L2 weaken Ethereum Mainnet?

As the number of users and transaction volume of the Layer 2 network (L2) increases, there are concerns that this may weaken the position of the Ethereum Mainnet (L1). However, in fact, L2 and L1 complement each other, and together they build the future of the Ethereum ecosystem.

First, the security foundation of L2 relies on the Ethereum Mainnet. Secondly, the Ethereum Mainnet itself has limited processing capacity and urgently needs L2 to expand the appeal of the ecosystem, otherwise it may be surpassed by other public chains. In addition, when L1 transaction congestion leads to soaring fees, it can actually reduce the network effect, which is detrimental to the long-term development of Ethereum.

Although the small scale of L2 transactions may affect L1 fees, as the L2 ecosystem flourishes, large-scale transactions will also bring more security fees to L1. Attracting users and developers in a broader space is the organic direction of development. Ethereum should not be limited to the current situation, but should pursue a grander vision.

The expansion of Ethereum will inevitably form an intricate network, including vertical L2, L3, and horizontal sharding, EVM-compatible chains, etc. This architecture combines shared security for L2 and the characteristics of a loose federation for other public chains. It is expected to achieve the capability of processing tens of thousands or even hundreds of thousands of transactions per second in the future, but this will require a long period of technological evolution.

L2 has given Ethereum a greater competitive advantage. Compared to other public chains, L2 offers both high security and low fees with high throughput. Without L2 expansion, Ethereum may lose its moat and network effects. It is expected that in the future, the transaction volume and user numbers of L2 will surpass those of the Ethereum Mainnet and most public chains, especially after the technological upgrades, this trend will accelerate.

Although the rise of early L2s may affect the fees of L1, as the transaction volume of L2 grows, the proportion of fee revenue from L2 will gradually increase. In the future, there will not only be a few L2s, but many players will emerge, possibly 3-5 dominant L2s, along with more niche L2s.

In summary, Ethereum and L2 have a symbiotic relationship that promotes each other. L1 provides security and settlement services for L2, while L2 brings more fee value and network effects to L1, thereby strengthening Ethereum's moat. This positive interaction will drive the long-term development of the entire Ethereum ecosystem.