ETH Is Down Bad, While Layer 2s Are Ripping. Are L2s Parasitic to Ethereum? - Ep. 701
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There's 2 blockchains, arguably more, but let's say 2 blockchains that have fully implemented sharding, which in my view proves that we can do l one scaling. And if we can do l one scaling, why why, for god's sakes, why would we accept all this centralization? For God's sakes, why would we accept all this fragmentation? Why would we accept all of those fees?
Hi, everyone. Welcome to Unchained, your no high resource for all things crypto. I'm your host, Laura Shin, author of the Cryptopians. I started covering crypto 9 years ago, and as a senior editor at Forbes, was the 1st matri meter partner to cover cryptocurrency full time. This is the September 10th, 2024 episode of Unchained. If you're envisioning ways to make an impact on transforming global systems through blockchain, the Stellar Meridian 2024 conference is for you. Get $50 off your ticket now at meridian.steller.org by using the code unchainedpod. Are you looking to level up your crypto?
Laura. Great to be here.
There's been a lot of consternation this whole year about the price of ether and how it's vastly underperforming both Bitcoin and Solana. The ETH to BTC ratio has dropped by about a third over the last year while the SALT to ETH ratio has quintuples. And recently there's been a lot of questioning about whether layer twos are parasitic to Ethereum layer 1. So all of this has raised questions about whether Ethereum is following the right roadmap. And I believe the 2 of you have different positions on this. But before we dive into all the details, why don't we just make sure everybody kind of und
That's right, Laura. About 4 years ago, Ethereum made the decision to pursue, what we at the time called the roll up centric roadmap, and and still call it today. It's also called increasingly the L2 centric roadmap. And that idea is that the Ethereum layer 1 specializes as a maximally decentralized, incredibly neutral base layer. And instead of serving, mass market users directly, the primary customers of the L1 become Whales Corporation governments and L2s. And then, the world comes on chain on Ethereum through the layer 2 you know, the marketplace of layer twos, which, instead of being esse
And so, Justin, we're now in this current state where, this kind of divide that Ryan has described does exist, and that not only percolates out to kind of how the users are sort of separated, but also how some duties and revenue are divided between the layer twos and Ethereum layer 1. Can you describe how that works and also the role of the Denkune upgrade in that setup? Sure.
But I'm I'll I'll move a bit more away from descriptive and and start talking about some of my criticisms of this because, no, I I do think that this is just a a travesty, really. I mean, I just I just wanna point out that all these layer twos that Ryan is referring to, like, if we just look at the top 15 alone, they're all centralized. Right? So, like, what is a layer 2 scaling road map? I think it's just not scaling the layer 1. And and I have a real problem with just not scaling the layer 1 at all and allowing these kind of private for, you know, for profit, you know, in seeking l twos to b
Yeah. But just from, like, a a technical perspective, like, what activity is happening on the layer twos and what activity is happening on the layer 1?
Right. Right. So the layer 1, capacity is obviously idea behind Ethereum's, layer 2 road map, to now steel man the argument, is that, basically, almost all of the usage is going to move to layer twos. That's the idea. If you do execution is moving to layer twos, that means smart contra
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