Here’s ‘Ethereum’s biggest problem with L2s’ – Polygon CEO

  • Blast and Base have heightened competition within the Ethereum L2 space. 
  • Polygon CEO sees L2 competition as bad for Ethereum

Previously, the Ethereum layer 2 (L2) space, which includes projects like Arbitrum [ARB] and Optimism [OP], held significant influence.

Yet, the arrival of Coinbase’s L2 solutions, Base and Blast, has intensified the level of competition. Currently, Optimism ranks fourth in terms of Total Value Locked (TVL).

Blast and Base are in the second and third spots, with $1.67B and $1.45B in TVL, respectively. 

L2 solutions, which aim to improve Ethereum’s scalability, are currently facing intense competition. As stated by Marc Boiron, the CEO of Polygon (MATIC), this fierce rivalry within L2s poses a significant challenge for Ethereum.

Boiron stated; 

“The main challenge for Ethereum is that various Layer 2 solutions are constantly competing with each other within the Ethereum network, instead of focusing on expanding Ethereum’s reach and competition beyond it.”

Ethereum fragmentation problem

L2 solutions, proposed by Vitalik Buterin as a means to tackle Ethereum’s scaling challenges, have inadvertently resulted in fragmented liquidity within each L2 instance.

Boiron believes that the issue goes beyond just user versus developer competition; the intense competition in the space exacerbates the problem of overheating.

Based on information from CoinShares, a company specializing in digital asset management, resolving Ethereum’s issue of fragmentation may enhance user experience, equalize liquidity, and facilitate “bridge-free” transfers between different platforms.

some second language (L2) platforms have chosen interoperable roll-up solutions to tackle these problems. For instance, Polygon uses an Aggregation Layer (AggLayer), while Arbitrum offers Orbit, and Optimism relies on a Superchain for leverage.

Despite interoperable protocols, the CoinShares report points out that a persisting challenge exists because of varying technical methods.

“Interoperability is still a problem, mainly fragmentation of liquidity and social coordination.”

An alternate perspective holds that the aggregation layer may effectively address the issue of liquidity fragmentation.

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2024-04-09 02:15