Layer 2 solutions have emerged as a crucial component of the blockchain ecosystem, particularly in addressing congestion and reducing gas fees on the Ethereum mainnet. However, recent discussions in the crypto community have raised concerns about whether these Layer 2 solutions are drawing too much activity and fee income away from the Ethereum mainnet.

At a recent blockchain conference at Cornell Tech in late April, participants highlighted the success of Layer 2 solutions in reducing congestion and driving down gas fees. However, there were suggestions that Ethereum should be more assertive in reclaiming a larger share of the revenue pie, especially when it comes to sequencing fees.

David Hoffman, an owner at Bankless, noted during a panel discussion at the conference that there have been admissions within the Ethereum Foundation about being too passive in securing a larger share of the revenue generated by Layer 2 solutions. Hoffman has advocated for Ethereum to make a strategic pivot given the changing dynamics of the crypto environment.

One of the key issues raised is that while Layer 2 solutions are earning significant revenues from transaction order fees, these profits are not being passed on to the Ethereum mainnet. Centralized Layer 2 solutions like Base, Optimism, and Arbitrum are benefiting from the security and liveness guarantees of the Ethereum mainnet while capturing lucrative sequencing fees.

The introduction of blob transactions in Ethereum's Dencun upgrade in March 2024 has facilitated the operation of Layer 2 solutions, leading to a surge in user demand. However, concerns have been raised about the imbalance in fee distribution, with Layer 2 solutions reaping substantial profits while paying relatively little to the Ethereum mainnet.

In response to these concerns, there have been discussions around the concept of "based rollups," where transaction sequencing would be conducted on the mainnet rather than on Layer 2 solutions. This approach aims to address the centralization risks associated with current sequencing mechanisms on Layer 2 solutions.

While there are proposals to impose taxes on Layer 2 solutions to ensure fair revenue distribution, there are concerns about the potential impact on the competitiveness and decentralization of these solutions. Ethereum stakeholders are exploring ways to incentivize a more equitable distribution of fees while maintaining the network's growth and decentralization principles.

Overall, the discussions around the relationship between Layer 2 solutions and the Ethereum mainnet highlight the ongoing evolution and challenges within the blockchain ecosystem. As Ethereum continues to navigate these complexities, stakeholders are exploring strategies to ensure a sustainable and equitable ecosystem for all participants.

Source: https://cointelegraph.com/news/layer-2s-good-for-ethereum-or-extractive?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound