After years of refinement, Ethereum, the world’s largest smart contract platform, is evolving. However, it is not evolving as most decentralization purists would like. The network, trying to accommodate all of its users, now relies primarily on off-chain solutions using rollup techniques to process more transactions and relieve the mainnet.
The Ethereum Layer-2 boom
The result was a boom with Layer 2 platforms. According to L2BeatAll of these Ethereum-scale off-chain solutions manage over $37 billion in assets. The largest of these is Arbitrum, which controls more than $13 billion.
Despite the boom, the question of decentralization remains raised. Arbitrum, Base and other layer 2s on Ethereum could gain traction, but most have yet to decentralize.
For example, their developers’ inability to release a flawless decentralized system or sequencer makes them a weakness in the broader Ethereum ecosystem.
Public data shows Arbitrum has a fault-proof authorized system, with Optimism expected to withdraw after audits revealed flaws. In any Layer 2 setup, there is a flawless system to ensure that any transaction sent to the sequencer is valid, just as it would be if sent to the mainnet.
From faultless, it is sequenced before batch and confirmed on the main network. Fees are paid each time Ethereum validators settle this batch of transactions.
Will L2s need to purchase decentralization from mainnet validators?
The problem is that fees have dropped rapidly over the past few months after Dencun was activated. This trend suggests that low gas fees amid a booming Layer 2 ecosystem could deter validators. While this is a concern, Token Terminal analysts are convinced that this is about to change.
According to their prediction, all Ethereum Tier 2s will eventually need to “purchase” decentralization from mainnet validators. The good news is that there are many choices. According to Beaconcha.inmore than a million validators secure the blockchain.
Token Terminal argues that while they can also choose to build, creating a complex network of a decentralized network of layer 2 validators will require a lot of resources.
For this reason, it will be possible to purchase decentralization from a subset of layer 1 Ethereum validators. If selected, these validators will negotiate more favorable rates than those offered by the network, thus significantly increasing their income.
At the same time, as the demand for Layer 2 decentralization solutions increases, the flow of validators will also increase.
Featured image from Canva, chart from TradingView
