After years of improvement, Ethereum, the world’s largest smart contract platform, has begun to expand. However, it is not expanding in the way that most proponents of decentralization would like. The network is trying to accommodate all its users, and now relies mainly on off-chain solutions using pooling techniques to process more transactions and relieve pressure on the mainnet.
Ethereum layer-2 boom
The result has seen a boom with second-tier platforms. according to L2BeatAll of these off-chain solutions that scale Ethereum manage over $37 billion in assets. The largest of them all is Arbitrum, which controls more than $13 billion.
Despite the boom, the issue of decentralization remains. Arbitrum, Base, and other second layers on Ethereum may be gaining traction, but most of them have not yet been decentralized.
For example, the failure of its developers to release a fault-tolerant decentralized system or serializer makes it a weak point in the broader Ethereum ecosystem.
Public data shows Arbitrum has a licensed system that is resistant to errors, with Optimism having to withdraw after audits revealed flaws. In any Layer 2 setup, there is an error-tolerant system in place to ensure that any transaction sent to the sequencer is correct, just as if it were sent on the mainnet.
Through fault proofing, it is serialized before being compiled and confirmed on the mainnet. There is a fee paid when Ethereum validators settle this batch of transactions.
Will L2s have to buy decentralization from mainnet validators?
The problem is that the fees have dropped rapidly over the past few months after Dencun was activated. This trend suggests that low gas fees amid a thriving second-tier ecosystem could demotivate auditors. While this is worrying, so are Token Terminal analysts convinced That’s about to change.
In their prediction, all second layers of Ethereum will eventually have to “buy” decentralization from mainnet validators. The good news is that there are plenty to choose from. according to Beaconcha.inMore than one million validators secure the blockchain.
Token Terminal says that although they can also choose to build, creating a complex network from a decentralized network of Layer 2 validators would be resource intensive.
For this reason, a decentralized purchase of a subset of Ethereum’s layer-one validators will be possible. If these validators are selected, they will negotiate better fees than what the network is offering, significantly increasing their revenue.
At the same time, as the demand for the second-layer decentralization solution rises, the flow of validators will also rise.
Featured image from Canva, chart from TradingView
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