What if it was Ethereum that got the most benefit from Layer 2 networks?

As Ethereum Layer 2 grows in popularity, Ethereum gas fees increase. This is because layer 2 of the network requires high amounts of gas

Ether Benefits from Layer 2 Expansion

Tier 2 networks are spending record amounts of gas on the Ethereum mainnet. According to data from Dune on the channel, Layer 2 networks spent over $52 billion gas in the month of May alone. The most illustrative example is last Wednesday, the day after Optimism launched its OP governance token. On this day, the gas expenditure of all Layer 2 networks is approximately 3.95 billion.

For a better comparison, consider the monthly gas total spent by layer 2 networks on Ethereum in May 2021. The monthly gas total was around 5 billion, while in May 2022 it was around 52 billion , marking a more than tenfold increase in absolute gas usage.

When Ethereum traffic increases, all ETH holders gain value from it. In effect, the base gas fee on Ethereum is burned, which reduces the overall supply of ETH and therefore increases the value of all remaining tokens. In this way, Ethereum takes advantage of the use that is currently made of its blockchain by layer 2 networks. These use its block space to settle transactions more efficiently than what can be done directly on the mainnet. .

Layer 2 is a fairly generic term used to refer to technology solutions that incorporate blockchain scaling that process transactions on separate networks and then send them back to the Ethereum mainnet for settlement. Layer 2 networks include Optimism and Aribrum, which are layer 2 networks based on a cryptocurrency technology known as Optimistic Rollups. These two networks aggregate off-chain transactions, these transactions are then settled in a single operation on the Ethereum mainnet in an effort to reduce the transaction load.

Layer 2 networks and side chains

Do not confuse layer 2 networks with sidechains.

Polygon’s Matic blockchain is an example of side chain. The side chains have their own consensus mechanisms.
Layer 2 networks, on the other hand, offload Ethereum of the transactional overhead, but borrow or inherit its security by settling their lots on the mainnet. This results in an interesting dynamic where Layer 2 transactions become increasingly cheaper for users, but mainnet transactions remain expensive enough to pay for Ethereum’s considerable security expense.

Commenting on the surge in Layer 2 usage on Twitter today, Polygon co-founder Sandeep Nailwal speculated that over time, Ethereum could evolve from a user-centric chain. to a network-centric chain, where it primarily settles Layer 2 network transactions in batches instead of individual transactions from the mainnet generated by users. ” As I also said before, #Ethereum is moving from a B2C (user-to-chain) business model to a B2B (chain-to-chain) model. “, he said, adding that eventually, “ the majority of Ethereum’s gas would be used by L2 chains. »

To conclude, remember that the Ethereum network is currently working on its merger which should allow it to move from a validation protocol Proof-of-Work to a protocol Proof-of-stake. Contrary to what many users hope, this switch to Proof-of-Stake will not have a substantial impact on gas costs.

Source : CRYPTO BRIEFING

Receive a summary of news in the world of cryptocurrencies by subscribing to our new daily and weekly newsletter service so you don’t miss any of the essential Cointribune!

User Image

Luc Jose Adjinacou

Far from having dampened my enthusiasm, an unsuccessful investment in a cryptocurrency in 2017 only increased my enthusiasm. I therefore resolved to study and understand the blockchain and its many uses and to relay with my pen information relating to this ecosystem.

We want to say thanks to the author of this write-up for this awesome material

What if it was Ethereum that got the most benefit from Layer 2 networks?


You can view our social media profiles here and additional related pages here.https://metfabtech.com/related-pages/