TL; DR
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50% of all Ethereum-based transactions took place on layer 2s (L2s) in the first half of 2024, rather than on Ethereum itself; that has its pros and cons.
Full story
Did you know that more than 50% of all Ethereum-based transactions in the first half of 2024 took place on layer 2s (L2s), rather than on Ethereum itself?
(At least, in terms of total transaction volume).
On the one hand, this is a sign of great innovation!
L2s can generally handle more transactions at a lower cost, making Ethereum-based transactions cheaper and faster for everyone.
By moving transactions off the main Ethereum chain, L2s can also help the entire network run more smoothly by reducing congestion.
BUT – before we get too excited about Ethereum offloading half of its transactions to other Ethereum-based chains, there are risks to L2s too.
Look, maybe it’s just us, but the number of L2s launched on Ethereum feels overwhelming.
And while that can help from a user experience perspective, having so many options can confuse users and spread assets thinly across platforms.
Also – the big one – many L2s rely on centralized components, which runs counter to Ethereum’s entire decentralized value proposition.
Take sequences for example (these are the things that determine the order in which the transactions should be processed before they are processed).
If a single, centralized entity controls the sequencer, it introduces a critical central point of control and a potential point of failure.
So while innovation and improved user experiences are great for web3, we hope the incredible teams building L2s don’t lose sight of the original value of blockchain technology.
And that, our friends, is decentralization.