Ethereum’s Resurgence: L1 Attracts Major DeFi While L2s Seek Efficiency
The Ethereum ecosystem is experiencing a notable shift, with established DeFi protocols reinforcing their presence on the mainnet, and several Layer 1 (L1) blockchains transitioning to Layer 2 (L2) solutions. This dual movement highlights Ethereum’s continued gravitational pull for high-value decentralized finance (DeFi) and the growing appeal of L2s for scalability and cost efficiency.
Ethereum’s Layer 1 maintains a dominant position in the DeFi space, boasting a significantly larger Total Value Locked (TVL) compared to its competitors. This strong foundation continues to attract major DeFi projects, solidifying the mainnet’s role as a core hub for high-value transactions and liquidity.
L2 Adoption Driven by Savings and Network Effects
For various alternative L1s, the decision to migrate to Ethereum’s L2 ecosystem is driven by substantial cost savings and the benefits of joining a larger network. L2 solutions offer a pathway to reduced operating expenses and access to Ethereum’s extensive user base and developer community.
Celo and Ronin Embrace the L2 Model
One notable example is Celo, a mobile-first payments network. Celo transitioned to an L2, discontinuing its independent validator network. This strategic move is projected to generate annual operating cost savings of approximately $7 million, demonstrating the financial benefits of an L2 migration.
Similarly, Ronin, an L1 blockchain known for hosting the popular game Axie Infinity, announced its plans to integrate with Ethereum as an L2 by early 2026. This move comes years after network congestion initially led Axie Infinity to move off the Ethereum mainnet. Jeffrey “Jiho” Zirlin, co-founder of Sky Mavis (the creator of Axie Infinity), has indicated that Ethereum has largely delivered on its scaling roadmap, making the transition back an attractive option for Ronin.
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