TL;DR
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50% of all Ethereum-based transactions happened on layer 2’s (L2s) in the first half of 2024, rather than on Ethereum itself; which has its pros, and its cons.
Full Story
Did you know that over 50% of all Ethereum-based transactions happened on layer 2’s (L2s) in the first half of 2024, rather than on Ethereum itself?
(At least, in terms of the total volume of transactions).
On one hand this is a sign of great innovation!
L2s can generally handle more transactions at a lower cost, making Ethereum-based transactions cheaper and faster for everyone.
By moving transactions off the main Ethereum chain, L2s can also help make the whole network run smoother by reducing congestion.
BUT – before we get too excited about Ethereum palming off half of it’s transactions over to other Ethereum-based chains, there’re risks to L2s too.
For example, look, maybe it’s just us, but the number of L2s that’ve been launched on Ethereum feels overwhelming.
And while that may help from a user experience side of things, having so many options can confuse users and spread assets thinly across different platforms.
Also – the big one – many L2s rely on centralized parts, which goes against the entire decentralized value prop of Ethereum.
Take sequences for example (they’re the things that decide the order of transactions to be processed in, before they’re processed).
If a single, centralized entity controls the sequencer, that introduces a critical central point of control and a possible point of failure.
So, while innovation and improved user experiences are great for web3, here’s hoping the incredible teams building L2s don’t lose sight of the original value prop of blockchain technology.
And that, our friends, is decentralization.
