TL; DR
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Before interoperability is resolved, slow handoffs between L2s will force the market to make a clear choice, resulting in one L2 taking over most of the market.
Full story
If you feel exhausted after that last part, don’t panic, we’re in good hands!
Ethereum has the largest number of big-brained developer types in the space.
That means they are working on a solution!
A solution that essentially makes the process of transferring your Ethereum between layer 2s so fast and cheap, you won’t even notice!
It all happens quietly in the background. The friction will be gone… and you will be blissfully ignorant of how the exchange works.
(Same as with bank transfers).
That being said: we still believe that the L2 war will not happen alone, but that one clear winner will capture most of the market.
Why how? It’s all about incentives (short, medium and long term).
Short-termmost users won’t want to transfer their ETH between layer-2s because it’s so damn slow and clunky (for now).
In the medium termwill this push developers to choose the most active/popular/well-funded tier-2 to build their products on.
(To not scare people off/make it as easy as possible for a large number of users to adopt their product).
In the long-termno matter how cheap and fast transfers become between two opposing Layer-2s – the cost of moving Ethereum from one person’s wallet to another will always be cheaper/faster if the transfer takes place on the the same chain.
And this creates a snowball effect…
At first, users will avoid transferring between L2s → which will run in silos adoption for a set of L2s → the L2 with the most adoption will get the majority of developers’ love → by the time these 20+ L2s become fully interoperable (aka friendly with each other), it will be too late…
Because certainly, the cost and speed of transfer between all/all L2’s wills possibly become negligible.
But by then the market will have chosen one dominant chain (alongside some runner-ups).
Don’t believe us? The same thing happened with email.
Email is an ‘open protocol’ (also called an open set of rules) that Everyone everyone you can build on, without prior permission and for free (just like Ethereum).
One email platform after all owns 58% of the global email market, while the runners-up lag behind with percentage ownership dramatically declining:
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Apple @ 58.07%
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Gmail @ 29.67%
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Outlook @ 3.42%
Right now, the top Ethereum L2 scaling solutions (based on total value) look like this:
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Polygon @ $10.1 billion
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Arbitrum @ $4.37 billion
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Unchangeable @ $3.8 billion
So how will the L2 wars end?
Whereby one winner takes the most.
Which L2 will that be?
No idea ¯\_(ツ)_/¯