Ethereum faces a crossroads: scale its layer 1 or lose the momentum of its ecosystem The Ethereum ecosystem is going through a crucial moment in its evolution. As new applications, developers, and users increasingly focus on layer 2 (L2) solutions, a worrying phenomenon is evident: a large part of that activity is not reinforcing the so-called 'flywheel' or network effect of the main network (L1). Instead of strengthening the ecosystem, many of these L2s are operating in isolation, draining value without feeding back into the underlying infrastructure.

This disconnection originates, largely, from an overestimation of the expectations placed on rollups as a scaling solution. Since 2020, Ethereum prioritized rollups over other options like sharding, under the premise that they would be simpler, would not compromise L1 security, and would offer better composability. However, this technical choice also became an incentive architecture that, over time, has shown its limitations.