After years of refinement, ethereum, the world's largest smart contract platform, is scaling. However, it does not scale as most decentralization purists wish. The network, which attempts to adapt to all its users, now relies primarily on off-chain solutions that use cumulative techniques to process more transactions and offload the mainnet.
The Rise of ethereum Layer 2
The result has been a boom with layer 2 platforms. According to L2BeatAll of these off-chain solutions that scale ethereum manage assets worth over $37 billion. The largest of them all is Arbitrum, which controls more than 13 billion dollars.
Despite the boom, the issue of decentralization still persists. Arbitrum, Base, and other Layer 2s on ethereum might be gaining traction, but most have yet to become decentralized.
For example, the fact that their developers have not released a failsafe decentralized system or sequencer makes them a weakness in the broader ethereum ecosystem.
Public data shows that Arbitrum has a fail-safe authorized system, and Optimism had to withdraw after audits revealed flaws. In any Layer 2 setup, there is a fail-safe system to ensure that any transaction sent to the sequencer is valid, just as it would be if it were sent to the mainnet.
From failsafe, it is sequenced before being pooled and committed to the main network. A fee is paid each time ethereum validators settle this batch of transactions.
Will L2s have to buy decentralization from Mainnet validators?
The problem is that rates have fallen rapidly in recent months after the activation of Dencun. This trend suggests that low gas rates amid a booming Layer 2 ecosystem could disincentivize validators. While this is concerning, Token Terminal analysts are x.com/tokenterminal/status/1848754231437889870″ target=”_blank” rel=”noopener nofollow”>convinced that this is about to change.
In his prediction, all ethereum layer 2s will eventually have to “buy” decentralization from mainnet validators. The good news is that there are many to choose from. According Beaconcha.inMore than a million validators are securing the blockchain.
Token Terminal maintains that while they can also choose to build, creating a complex network of a decentralized network of Layer 2 validators will be resource-intensive.
For this reason, it will be feasible to purchase the decentralization of a subset of ethereum layer 1 validators. If chosen, these validators will negotiate better rates than those offered by the network, significantly increasing their income.
At the same time, as demand for a Layer 2 decentralization solution increases, the flow of validators will also increase.
Featured image from Canva, TradingView chart
