Ethereum’s Shifting Landscape: L1 Revival and L2 Integration
The blockchain ecosystem is witnessing a dynamic shift, with projects re-evaluating their foundational layers. While some high-value DeFi protocols are reaffirming their presence on Ethereum’s mainnet, several layer-1 (L1) blockchains are transitioning to become layer-2 (L2) solutions within the Ethereum ecosystem.
Ethereum’s mainnet continues to demonstrate its strength, particularly in the high-value DeFi sector. It currently boasts a significantly larger Total Value Locked (TVL) compared to its competitors. This resurgence suggests a renewed confidence in Ethereum’s core infrastructure for critical financial applications.
The L2 Migration Trend
Several prominent L1s are embracing the L2 model. This move offers substantial benefits, including potential cost savings and access to Ethereum’s well-established network effects. The L2 architecture aims to alleviate congestion and reduce transaction fees, making the Ethereum ecosystem more scalable and efficient.
Celo’s Strategic Shift
Mobile payments network Celo, for instance, made a notable move earlier this year. The project decided to decommission its independent validator network and integrate as an L2 on Ethereum. This transition is projected to yield significant operational cost savings, estimated at nearly $7 million annually.
Ronin’s Return to Ethereum
Blockchain gaming platform Ronin, known for hosting the popular game Axie Infinity, also announced its intention to rejoin the Ethereum ecosystem. After an initial departure due to network congestion, Ronin plans to transition back to Ethereum as an L2 by early 2026. Sky Mavis co-founder Jeffrey Zirlin highlighted that Ethereum has largely delivered on its scaling promises, paving the way for Ronin’s return.
High-Value DeFi on Ethereum L1
Conversely, several prominent DeFi projects are continuing to leverage Ethereum’s mainnet for their operations. Protocols like Synthetix are examples of high-value applications that remain anchored to the Ethereum L1, underscoring its capacity to support complex and substantial financial activities. The choice to remain on L1 or transition to L2 often hinges on a project’s specific needs, security requirements, and cost considerations.
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