{"id":127292,"date":"2025-04-16T12:18:47","date_gmt":"2025-04-16T12:18:47","guid":{"rendered":"http:\/\/cryptospotters.net\/?p=127292"},"modified":"2025-04-16T12:18:47","modified_gmt":"2025-04-16T12:18:47","slug":"ethereum-l2-development-is-double-edged-sword-for-eth-value","status":"publish","type":"post","link":"http:\/\/cryptospotters.net\/?p=127292","title":{"rendered":"Ethereum L2 development is \u2018double-edged sword\u2019 for ETH value"},"content":{"rendered":"

Source: Cointelegraph.com NewsEthereum\u2019s push toward layer-2 (L2) blockchain scalability may be a double-edged sword for Ether, potentially weakening the value accrual of the world\u2019s second-largest cryptocurrency, according to a new report from Binance Research.
\nThe report suggests that Ethereum\u2019s L2 blockchain networks \u2014 built to improve mainnet scalability and lower transaction costs \u2014 may be cannibalistic of the Ethereum base layer, negatively impacting the price of Ether (ETH).
\nEthereum\u2019s dominance in terms of decentralized exchange (DEX) volume and fees generated is \u201cunder threat\u201d by Solana and BNB Smart Chain, Binance Research wrote.
\nEthereum, Solana, BNB, DEX volume. Source: Binance ResearchThe main factors include slow and expensive transactions, fragmented \u201cdeveloper mindshare and liquidity, and reduced value accrual to the L1 due to the rise of L2s,\u201d the report said.
\nEthereum\u2019s roadmap already includes future upgrades aimed at creating cheaper transactions, additional security, and more future-proof incentives for the mainnet.
\nStill, Ether\u2019s value accrual may continue to suffer in the near term since the next two major upgrades don\u2019t immediately address these issues, but are aimed at creating more scalability around data availability and incorporating more L2 networks.\u00a0
\nRelated: Google to enforce MiCA rules for crypto ads in Europe starting April 23
\nConcerns have been reignited around the Ethereum mainnet\u2019s economic incentives since Ether\u2019s price fell to $1,410 on April 7, marking its lowest level since March 2023.
\nETH\/USD, 1-year chart. Source: CointelegraphEther\u2019s price fell over 61% during a four-month downtrend, which started on Dec. 16, 2024, when ETH briefly peaked above $4,100, Cointelegraph Markets Pro data shows.
\nEthereum\u2019s Pectra, Fusaka upgrade won\u2019t address Ether\u2019s value accrual
\nAfter initial delays, Ethereum\u2019s highly anticipated Pectra upgrade is set to go live on the mainnet on May 7.
\nThe Pectra upgrade aims to improve Ether staking and L2 network scalability, increase blob capacity to enable more data handling on the mainnet and improve overall network capacity.
\nThe Fusaka upgrade, expected in late 2025, will focus on scaling the Ethereum mainnet as a data availability layer by introducing EIP-7594. Fusaka may also bring an update to the Ethereum Virtual Machine (EVM), resulting in a \u201cmore structured approach\u201d to smart-contract creation, reducing runtime overhead and improving developer experience.
\nEthereum data capacity upgrades. Source: Binance ResearchEthereum\u2019s commitment to L2 scaling may be a \u201cdouble-edged sword\u201d due to concerns around the mainnet\u2019s \u201ccompetitiveness as a data availability layer\u201d and \u201cthe sustainability of value accrual to Ethereum the asset,\u201d the report said.
\nRelated: Ethereum shorter gains $1.1M on 50X leverage in 2 days
\n\u201cOne promising path for stronger ETH value accrual is the development of based rollups,\u201d which \u201ccontribute significantly more in fees\u201d to Ethereum compared with L2s like Base, Arbitrum and Optimism, according to a Binance Research spokesperson.
\nL2s, rollups by costs paid to Ethereum mainnet. Source: Binance Research\u201cAnother avenue is Ethereum\u2019s evolving role as a data availability layer,\u201d the spokesperson told Cointelegraph, adding:
\n\u201cValue accrual through this model depends on external factors: L2s must continue to choose Ethereum for data availability, and blockspace demand must grow in a competitive landscape where alternatives like Solana and BNB Smart Chain are gaining traction.\u201d
\n\u201cAligning incentive structures between Ethereum and L2s, whether through fee sharing, MEV capture, or protocol-level integrations, will be essential to ensure sustainable value flow back to ETH as an asset should Ethereum continue to commit to scaling with L2s,\u201d he added.
\nMagazine: 3 reasons Ethereum could turn a corner: Kain Warwick, X Hall of FlameRead More<\/a><\/p>","protected":false},"excerpt":{"rendered":"

Source: Cointelegraph.com NewsEthereum\u2019s push toward layer-2 (L2) blockchain scalability may be a double-edged sword for Ether, potentially weakening the value accrual of the world\u2019s second-largest cryptocurrency, according to a new… <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/127292"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=127292"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/127292\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=127292"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=127292"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=127292"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}