The Evolving Relationship Between Ethereum and Its Layer-2s

In this special edition of Coin Metrics’ State of the Network, we explore the evolving relationship between Ethereum and its Layer-2 ecosystem, examining how L2 usage and economics are reshaping Ethereum’s on-chain activity, and the path to restoring ETHs value accrual.

Key Takeaways:

  • As Ethereum leans into a Layer-2-centric scaling model, activity has increasingly migrated to L2s. This has helped scale its ecosystem but also reduced mainnet transaction demand, reshaping Ethereum’s economic dynamics.

  • The introduction of blobspace in the Dencun upgrade made L2 settlement significantly cheaper, enabling profitable L2s like Base—which has earned ~$94M in profit while paying just ~$4.9M to Ethereum. This has reignited debate over whether L2s are extractive or symbiotic.

  • ETH’s returns are increasingly tied to network fundamentals like fees and burn, suggesting it’s being valued as a revenue-generating asset. As those metrics decline, ETH’s underperformance reflects market concerns around weakening value accrual.

  • Upcoming upgrades like Pectra aim to double blob capacity and stimulate demand across both L1 and L2, laying the groundwork to restore long-term value to Ethereum’s ecosystem.

  •  

Brought to you by coinmetrics.io

Meet the Upgraded Dashboard
Compare up to four columns, add row context, and work faster in an intuitive workspace.
Try It Now
Weekly Metric Minute
Bite-size, data-driven crypto insights straight from our latest research every week.
Watch Now
Learn with Matthias
Short videos teach you to unlock deeper insights using Coin Metrics dashboards, APIs, and market data.
View Tutorials

Follow Us on X

Share on

Latest from CM

Our Special Insights

Dive Deeper