ETH Is Down Bad, While Layer 2s Are Ripping. Are L2s Parasitic to Ethereum? - Ep. 701
Unchained
Intro
This chapter explores blockchain scaling, focusing on sharding as a strategy to improve Layer 1 scalability. It discusses the trade-offs of centralization, the impact of transaction fees, and highlights recent advancements in Layer 2 solutions.
Ethereum's Layer 2 solutions are booming, but are they inadvertently holding back the value of ETH itself?
In this episode, Justin Bons and Ryan Berckmans engage in a heated debate over whether L2s are enhancing Ethereum's ecosystem or siphoning off its potential. They discuss the impact of L2s on decentralization, network effects, and whether Ethereum L1 can scale on its own or if the base layer and the rollups now have different incentives. Has Ethereum scaled appropriately for future usage, or was scaling via L2s the wrong roadmap for Ethereum?
Show highlights:
- 02:43 How Ethereum's rollup-centric roadmap consists of a decentralized Layer 1 (L1) for security with Layer 2 (L2) providing more transaction throughput
- 04:53 Why Justin is so critical about how L2s centralize Ethereum
- 14:53 Why, according to Ryan, Layer 2 solutions aren't parasitic to Ethereum but instead enhance its network effects, decentralization, and long-term value
- 25:35 Why Justin criticizes Ryan’s reliance on "trust me, bro" arguments, questioning the tribalism and authority in claiming the superiority of Ethereum researchers over those from other blockchains
- 28:15 How Justin thinks the Ethereum L1 could scale and what the tradeoffs are
- 39:58 Justin’s argument that Ethereum is stuck in the past and his claim that the blockchain trilemma doesn't exist anymore
- 46:30 Ryan’s take on Ethereum's L1 scaling focuses on solving bandwidth limitations and addressing whether L2s are going to fully decentralize
- 51:01 Whether SNARKS is the way that Ethereum scales the L1
- 59:24 Whether L2s will start accepting other tokens to pay for gas
- 1:05:23 Why Ryan predicts Ethereum's L2 adoption will surge, driving up L1 fees and boosting Ether's value as the leading digital money
- 1:05:39 Whether based rollups are a good solution for Ethereum to scale without losing all the fees
- 1:13:21 Why L2s would even try to decentralize and why Justin says that Solana has a better roadmap than Ethereum
- 1:17:54 Concluding thoughts from Ryan and Justin
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Guests:
- Justin Bons, Founder & CIO of Cyber Capital
- Previous appearances on Unchained:
- Is Bitcoin Doomed to Fail? Eric Wall and Justin Bons Face Off
- Ryan Berckmans, Ethereum community member and investor
Links
- Previous coverage on Unchained of ETH and L2s:
- Are L2s 'Parasitic'? Analysis Shows Ethereum Only Gets a Tiny Percentage of Fees
- Are Solana's 'Network Extensions' Just Like Ethereum's Layer 2s But by a Different Name?
- Ethereum Has Had a Banner Year in Most Areas. Except Price.
- Should Ethereum Layer 2s Urgently Decentralize Their Sequencers?
Others
- Justin’s thread on whether L2s are parasitic
- Tweet by Zach Rynes, aka ChainLinkGod
- Adam Cochran’s tweet on based rollups
- Ethereum Foundation September AMA
- Vitalkin on L2s
- How do layer 2s really differ from execution sharding?
- Layers 2s as cultural extensions of Ethereum
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