Polygon Labs CEO Marc Boiron believes that fierce competition between Ethereum layer 2 networks is the “biggest problem” facing the second-largest digital asset by market capitalization.
In an April 7 post on social media platform that explained:
“The biggest problem with Ethereum is that it continues to cannibalize itself through all the L2s competing for developers, users, and liquidity, rather than competing outside of the Ethereum ecosystem. Microeconomics 101 will tell you this is a bad strategy. “There is no answer, but it must be resolved,” he said.
Several cryptocurrency community members share Boiron’s view and argue that layer 2 networks should target networks outside of the Ethereum ecosystem. Karthik Senthil, venture partner at cryptocurrency hedge fund Lattice, said:
“L2 can only succeed if it meaningfully grows the pie and attracts the 99% of what is outside of Ethereum today (including web2). “No one can win if they fight over people who are already here.”
In particular, Boiron reposted a social media post urging layer 2 networks to play the long game and “champion each other.” post read:
“L2s will need to reframe their view on the value of siphoning apps from one L2 to another, as fragmentation and chain abstractions will soon be resolved. Soon, a successful application to x-L2 will improve the value of y-L2 by a percentage. Stealing an application erodes its value.”
Meanwhile, some community members argued that competition between Layer 2 could ultimately improve the Ethereum ecosystem.
Popularity of Layer-2
Layer-2 is a blockchain network designed to improve the scalability of Ethereum. It has gained significant popularity and adoption within the cryptocurrency ecosystem over the past few years.
According to data from L2Beat, the network processes a cumulative 123 transactions per second, outperforming Ethereum’s main chain by 10.7 times. For context, Coinbase’s high-flying Base Network and Arbitrum, the largest layer 2 blockchain, recorded higher transactions per second than the Ethereum mainnet the previous day.
Additionally, earlier this month, the number of active wallets utilizing the network increased to Exceeded 5 million. At the same time, the total value of assets locked on these platforms has exceeded $42 billion, and there are signs that this trend may continue.
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