Ethereum’s Evolving Landscape: A Resurgence of Layer 1 and Strategic Layer 2 Migrations
Ethereum’s Layer 1 (L1) is reasserting its position as a central hub for high-value decentralized finance (DeFi) projects. This comes as several prominent alt-L1s transition to Layer 2 (L2) solutions, while some projects already on L2s are returning to the mainnet. Ethereum’s substantial total value locked (TVL) significantly surpasses its closest competitors, highlighting its entrenched position in the DeFi ecosystem.
The Appeal of Layer 2 Solutions
The L2 model offers compelling advantages, particularly in cost savings and network effects. These benefits encourage alt-L1s to integrate with the broader Ethereum ecosystem.
Celo’s Strategic Shift to Layer 2
In March, mobile payments network Celo made a notable move, discontinuing its validator network to become an Ethereum L2. This strategic decision is projected to result in annual operational cost savings of approximately $7 million.
Ronin’s Return to Ethereum
Blockchain gaming L1 Ronin announced in August its intention to rejoin Ethereum as an L2 by early 2026. This migration marks a return to the Ethereum mainnet, five years after network congestion prompted its flagship game, Axie Infinity, to move off-chain. Jeffrey “Jiho” Zirlin, co-founder of Sky Mavis, the creator of both Axie Infinity and Ronin, notes that Ethereum’s scaling roadmap has largely come to fruition.
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