Can Ethereum L2 weaken Ethereum L1?

Will the development of Ethereum L2 weaken the position of Ethereum L1? This question deserves in-depth discussion.

First, we need to recognize that the security of Ethereum L2 comes from Ethereum L1. L2, as a scaling solution, brings greater appeal to the Ethereum ecosystem, which is crucial for Ethereum. Without the scaling of L2, Ethereum L1, with its limited processing capacity, is likely to be surpassed by other public chains.

When L1 transaction fees are too high, it leads to a decline in network effects. In the long run, this is not beneficial for Ethereum. Although when L2 transaction volumes are small, it may affect L1's fee revenue, as the L2 ecosystem prospers and develops, large-scale transaction volumes will actually bring more security fees to L1. Only by gaining favor from users and developers in a broader space can organic growth be achieved.

The expansion path of Ethereum is forming an intricate network. Vertically, there are concepts of L2 and even L3, while horizontally it includes sharding technology and EVM-compatible chains. This multi-dimensional expansion enables Ether to support larger-scale applications, with the future expected to achieve processing capabilities of hundreds of thousands of transactions per second.

L2 has created a larger moat for Ethereum L1. L2 not only shares Ethereum's security but also offers lower fees and higher throughput, making it difficult for other public chains to compete. Without the scalability potential of L2, L1 may lose its network effects and competitive advantages.

With development, the transaction volume and number of users of L2 are likely to surpass Ethereum L1 itself, and even exceed most other public chains. Although this may lead to a decrease in L1 transaction activity in the early stages, as L2 scales up, the proportion of fee revenue from L2 will gradually increase.

It is worth noting that L2 will not be limited to just a few, and more L2 projects may emerge in the future. There may be 3-5 dominant L2s, while there will also be many niche L2s.

Overall, Ethereum and L2 have a symbiotic relationship that promotes each other. L1 provides security and settlement services for L2, while large-scale trading activities on L2 bring more fee value to L1, creating a larger network effect that enhances Ethereum's competitiveness. This positive interaction will drive the overall development of the Ethereum ecosystem.