Ethereum’s push towards the scalability of the blockchain of layer 2 (L2) can be a double-edged sword for ether, potentially weakening the accumulated value of the second largest cryptocurrency in the world, according to a new report by Binance Research.
The report suggests that Ethereum L2 Blockchain L2 networks – designed to improve the scalability of the main and reduce transaction costs – can be cannibal of the basic layer Ethereum, negatively impacting the price of the ether (ETH).
Ethereum’s domination in terms of decentralized exchange volume (DEX) and the costs generated is “threatened” by Solana and BNB Smart Chain, wrote Binance Research.
Ethereum, Solana, BNB, volume Dex. Source: Research in binance
The main factors include slow and costly transactions, the “Mindshare developer and fragmented liquidity and the reduction of value to the L1 due to the increase in L2”, indicates the report.
The Ethereum roadmap already includes future upgrades aimed at creating cheaper transactions, additional security and more incentives for the Tutors for the Mainnet.
However, the accumulation of Ether’s value can continue to suffer in the short term, as the two following main upgrades do not immediately solve these problems, but aim to create more scalability around data availability and incorporate more L2 networks.
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The concerns were rekindled around Ethereum’s economic incentives, since the price of Ether fell to $ 1,410 on April 7, marking its lowest level since March 2023.
ETH / USD, graphic 1 year. Source: Cointelegraph
Ether’s price fell 61% during a four-month downward trend, which started on December 16, 2024, when the ETH cried briefly above $ 4,100, show the data from Cointelegraph Markets Pro.
The Fusaka Ethereum upgrade, the upgrade of Fusaka will not treat the value of Ether’s value
After the initial delays, the long -awaited upgrade of Pectra d’Ethereum should be posted on the Mainnet on May 7.
Pectra upgrade aims to improve the implementation of the Ether and the scalability of the L2 network, increase the Blob capacity to allow management of more data on the principal and improve the overall capacity of the network.
The upgrade of Fusaka, expected at the end of 2025, will focus on scaling Ethereum as a data availability layer by introducing EIP-7594. Fusaka can also bring an update to the Ethereum virtual machine (EVM), resulting in a “more structured approach” from the creation of intelligent contract, the reduction in general execution costs and the improvement of the developer’s experience.
Upgrades to the capacity of Ethereum data. Source: Research in binance
Ethereum’s commitment to L2 scaling can be a “double -edged sword” due to concerns concerning “competitiveness as data availability” and “the sustainability of value accumulation for Ethereum the asset”, indicates the report.
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“A promising path for an accumulation of stronger ETH value is the development of rollers based”, which “contribute much more in fresh” to Ethereum compared to L2 as the base, arbitrum and optimism, according to a spokesperson for Binance Research.
L2S, Rollups by paid costs at Ethereum MAINNET. Source: Research in binance
“Another avenue is the role of Ethereum evolution as a layer of data availability,” said the spokesperson at Cointelegraph, adding:
“The accumulation of value through this model depends on the external factors: L2 must continue to choose Ethereum for data availability, and the request for block space must develop in a competitive landscape where alternatives like Solana and BNB Smart Chain gain ground.”
“The alignment of the incitement structures between Ethereum and L2, whether by sharing costs, MEV capture or integration in terms of protocol, will be essential to guarantee the flow of lasting value to ETH as an active if Ethereum continues to commit to evolving with L2S”, he added.
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