Declining Scaling Dividends: Impact of Mainnet Upgrades on Layer 2
Layer 2 initially rose to prominence due to the limited performance and high Gas fees of mainnets. Taking Ethereum as an example, users had to pay exorbitant transaction fees during early network congestion, making Layer 2 a necessary scaling solution.
With multiple mainnet upgrades (such as fee optimization and data availability improvements), overall transaction costs have significantly decreased. This brings a structural shift:
- The rigid demand for Layer 2 among users is weakening
- Some simple transactions may flow back to the mainnet
- Layer 2’s competitive edge is no longer just lower costs
If Layer 2 relies solely on fee reduction as its core selling point, it will be difficult to maintain long-term competitiveness. The future focus will shift more towards performance optimization, user experience, and application ecosystem development.
Liquidity Fragmentation: Structural Issues from Multiple Parallel Layer 2 Networks
As more Layer 2 networks launch, the ecosystem is increasingly characterized by parallel chains. While this expansion boosts overall throughput, it also introduces clear side effects—liquidity is dispersed across different networks.
Specifically:
- Assets are distributed across multiple Layer 2s, making unified coordination difficult
- Users need frequent cross-chain operations, raising the barrier to use
- DeFi applications’ capital depth is weakened, impacting trading efficiency
Currently, cross-chain bridges and messaging protocols have alleviated this issue to some extent, but security risks and operational complexity remain. Thus, liquidity fragmentation has become a key bottleneck limiting further development of Layer 2.
From a broader perspective, this is also a phase that blockchain must go through as it moves from the single-chain era to the multi-chain era.
Token Value Controversy: Positioning Dilemma of Layer 2 Native Tokens
Another widely discussed issue is the actual utility and value capture ability of Layer 2 native tokens. Most Layer 2 networks still use ETH as the asset for Gas fee payments, meaning their native tokens lack direct demand support in core usage scenarios.
This has led to several key debates:
- Are native tokens merely governance tools?
- Is the value source clear enough without Gas usage scenarios?
- Is the relationship between tokens and network revenue reasonable?
Some Layer 2s have tried to enhance token value by introducing sequencer revenue distribution, staking mechanisms, or ecosystem incentives, but overall, there is still no unified solution to this issue.
If a clear value capture model cannot be established, Layer 2 tokens may face long-term market skepticism.
Transformation Behind the Challenges: From Scaling Tool to Ecosystem Competition
The challenges facing Layer 2 essentially reflect its developmental transition—from initially focusing on solving performance bottlenecks to gradually prioritizing ecosystem building. In the past, Layer 2’s value was mainly in reducing costs and improving efficiency. As these capabilities become basic features, its competitive logic also changes.
Future competition will not just revolve around TPS or transaction fees; it will depend on whether Layer 2 can continuously attract developers and users, build more efficient liquidity networks, and establish clear and sustainable token value systems. Scaling ability will become a baseline for market entry, while true differentiation will come from ecosystem depth and value capture capability.
The next stage for Layer 2 is no longer just about scaling; it’s about comprehensive competition in ecosystem and economic models. These challenges will also drive the blockchain industry from infrastructure upgrades towards a more mature application and ecosystem landscape.
