Ethereum’s Expanding Orbit: High-Value DApps and Migrating Chains
Ethereum’s Layer 1 (L1) is re-emerging as a center for significant decentralized finance (DeFi) projects, even as various Layer 1 networks transition to Layer 2 (L2) solutions. This trend highlights the evolving strategies within the blockchain ecosystem, with projects seeking both the security and liquidity of Ethereum’s mainnet and the scalability and cost efficiency of L2s.
The Allure of Ethereum L1 for DeFi
High-value DeFi platforms, such as Synthetix and Aave, continue to operate on Ethereum’s L1, leveraging its established infrastructure and substantial liquidity. Ethereum currently leads in Total Value Locked (TVL), significantly surpassing its nearest competitors. This concentrated value reinforces its position as a preferred environment for major DeFi protocols.
Alt-L1s Embrace the L2 Model
In a notable shift, several independent Layer 1 blockchains are migrating to become Layer 2 solutions on Ethereum. This move offers potential operational cost reductions and access to Ethereum’s expansive network effects. The L2 model provides a pathway for these projects to scale while maintaining a connection to the robust Ethereum ecosystem.
Celo’s Strategic Transition
Mobile payments network Celo, for instance, transitioned from its independent validator network to an Ethereum L2. This strategic shift is projected to result in annual operational savings of approximately $7 million, demonstrating the financial appeal of L2 integration.
Ronin’s Return to Ethereum
Blockchain gaming platform Ronin, known for its popular game Axie Infinity, also announced its intention to move back to the Ethereum ecosystem by early 2026. This decision comes after network congestion issues initially led Axie Infinity to move off the Ethereum mainnet. Jeffrey “Jiho” Zirlin, co-founder of Sky Mavis, the creator of Ronin and Axie Infinity, commented on Ethereum’s progress in delivering on its scaling roadmap, indicating a greater confidence in the network’s future capabilities.
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