#L2 Short-Term Competitive Ethereum#

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Hot Topic Overview

Overview

Currently, L2 is in competition with Ethereum L1 in the short term, as many workloads that were originally on L1 (NFTs, trading, DeFi, gaming) have moved to L2, resulting in reduced fees generated on L1. However, in the long term, L2 can provide the Ethereum ecosystem and ETH assets with the ability to compete with a large number of new L1s, as L2 can maintain Ethereum's high decentralization while providing fast and cheap transactions. Therefore, while L2 will reduce L1's value accumulation in the short term, in the long term, L2 will be beneficial to Ethereum and become a way for Ethereum to defeat many emerging L1s.

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Analysis

Current analysis of L2 short-term competition with Ethereum suggests that L2 will indeed compete with Ethereum L1 in the short term, as many workloads that once existed on L1 (NFTs, trading, DeFi, gaming) have moved to L2, leading to a decrease in fees generated/burned on L1 in the past few years. However, in the long run, L2 will be the only way for the Ethereum ecosystem and ETH assets to compete with a large number of new L1s. This is because one of Ethereum's greatest strengths is its emphasis on decentralization, and L2 provides a way for Ethereum to maintain a highly decentralized platform while still being able to support fast, cheap transactions that can compete with alt-L1s. Ultimately, L2 will bring more traffic to Ethereum, even exceeding the fees generated before the emergence of L2, helping Ethereum defeat many new L1s.

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Classic Views

L2 will compete with Ethereum L1 in the short term, as many workloads have moved to L2, resulting in lower fees on L1.

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L2 is the only way for the Ethereum ecosystem and ETH assets to compete with a large number of new L1s, as L2 can provide fast and cheap transactions while maintaining Ethereum's high decentralization.

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L2 will be beneficial to Ethereum in the long run, as L2 will bring more traffic, ultimately generating more fees than before L2 appeared.

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L2 will be the way for Ethereum to beat many emerging L1s.

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