Ethereum is moving quickly. Its developers are scaling the network using Layer-2 technologies. These solutions reduce congestion and cut costs. However, this expansion introduces fresh challenges. As more transactions move off-chain, the economic demand for ETH weakens. Ethereum must find a way to grow without undermining the asset that fuels it.
How Layer-2 Changes the Game
Layer-2 systems process data away from Ethereum’s base layer, then post summaries back. This structure saves gas and boosts efficiency. Leading platforms like Base, Arbitrum, and Optimism dominate this space. Billions in value now flow through these networks. Users appreciate the lower fees. Developers love the speed.
But there’s a cost. These interactions often bypass Ethereum’s mainnet. That reduces gas usage and weakens ETH’s burn rate. While performance improves, ETH’s value accrual can suffer.
The Problem for ETH Holders
Ethereum’s token, ETH, gains value through demand for block space. When more people transact, more ETH gets burned. That makes ETH deflationary and more valuable over time. But when transactions shift to L2, that direct usage drops. ETH’s link to network activity becomes less direct. This weakens the core mechanics behind ETH price appreciation.
The ecosystem is scaling successfully. Yet, that success might undercut the token that drives its economy. Unless ETH usage increases alongside rollup activity, its relevance may slowly fade.
L2 Growth Is Accelerating
Layer-2 networks are booming. Rollups now host the majority of Ethereum-based activity. Mainnet usage is dropping. At the same time, the fees paid on Ethereum are falling. That means less ETH is burned. Over time, this change impacts staking rewards, scarcity, and price potential.
Without a strong mechanism linking L2 success to ETH demand, the token may no longer benefit from the ecosystem’s growth. That creates a serious misalignment Ethereum must fix quickly.
Upcoming Network Upgrades
Ethereum has several improvements in the pipeline. Upgrades like Pectra and Fusaka will increase efficiency. Proto-danksharding will expand blob storage, enabling more scalable L2 transactions. These enhancements make Ethereum better suited for mass adoption.
But none of these directly strengthen ETH’s economic position. More scale doesn’t guarantee more demand for ETH. Ethereum needs to go further. It must design systems where ETH becomes indispensable across the L2 stack.
Rollups Rely on Ethereum—But Not ETH
Rollups still anchor themselves to Ethereum’s base layer. This gives them security. However, many do not rely on ETH beyond posting data. They use their own tokens or pay minimal fees. While Ethereum remains essential for settlement, ETH doesn’t always benefit directly. That disconnect needs to be addressed.
If L2s grow too independently, Ethereum risks becoming a passive host. ETH would become less central, while other tokens capture the majority of value in the system.
Aligning ETH With Layer-2 Success
Ethereum can fix this. It needs mechanisms that link L2 growth to ETH demand. Several strategies could help:
- Shared Sequencing: If rollups use Ethereum-native sequencers, fee revenue could flow back to ETH holders.
- Data Markets: Charging rollups for blob usage could create new ETH-based fee structures.
- Value Redistribution: L2s could return a share of profits or activity rewards to Ethereum’s mainnet.
- Governance in ETH: Making ETH the currency of voting and governance in rollup ecosystems could increase its utility.
With these structures, Ethereum ensures that every L2 success benefits ETH directly. Otherwise, the network becomes stronger—but the asset weakens.
Keep Decentralization Intact
As Ethereum grows, it must not lose its core principle—decentralization. Many L2s rely on centralized sequencers today. Some have opaque bridges and governance. If that continues, Ethereum’s reputation for neutrality may be at risk. And if the base layer becomes just a back-end for centralized systems, the network loses its soul.
Ethereum must push for rollup standards. L2s should inherit its security model, censorship resistance, and open participation. That ensures decentralization doesn’t fade as scalability improves.
The Competitive Pressure
Ethereum’s position is not guaranteed. Other blockchains—like Solana and Avalanche—offer fast and cheap transactions on their base layers. They don’t depend on rollups. That makes user onboarding easier. If Ethereum’s complexity remains too high, it could lose ground. And as user attention shifts, ETH could lose market relevance.
This is why Ethereum must move with urgency. It must build tools that not only scale—but also sustain ETH as the foundation of value.
ETH’s Role in the Next Era
In five years, Ethereum could look completely different. Rollups may dominate. L2-native tokens might take over dApp economies. ETH may only be used for staking or data posting. That outcome is possible—but avoidable. If Ethereum integrates ETH deeper into L2 systems, it can avoid irrelevance.
ETH must remain essential across every touchpoint—payments, governance, and security. Otherwise, Ethereum will become a backend layer powering ecosystems that reward other assets.
Conclusion
Ethereum’s scaling efforts are working. Rollups bring better performance and lower costs. But this growth puts ETH at risk. As L2s thrive, ETH could become less important. That must be addressed before it’s too late. By designing systems that reward ETH holders as L2s grow, Ethereum can scale responsibly. It can protect the network’s value while supporting innovation.
But this requires alignment, not just engineering. Developers, L2 builders, and the core Ethereum team must coordinate. The future is multichain, but ETH must be at the center. That’s the only way to ensure Ethereum’s token stays as powerful as its technology.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research.
