Ethereum’s ecosystem is undergoing a significant transformation. While some high-value DeFi protocols, like Synthetix and Aave, are reinforcing the strength of the Ethereum Layer 1 (L1), other blockchain networks are integrating as Layer 2 (L2) solutions. This dual movement highlights Ethereum’s evolving role in the decentralized finance space.
Projects Embrace Ethereum L2s
Several independent Layer 1 blockchains are choosing to transition into Ethereum L2s. This strategic shift is driven by the potential for substantial cost savings and the benefits of aligning with Ethereum’s established network effects. The L2 model offers a compelling pathway for these projects to scale and operate more efficiently.
Celo’s Cost-Saving Transition
One notable example is Celo, a mobile-first payments network. Earlier this year, Celo opted to discontinue its independent validator network and rebrand as an Ethereum L2. This move has reportedly resulted in significant operational cost reductions, with Celo anticipating nearly $7 million in annual savings.
Ronin’s Return to Ethereum
Similarly, Ronin, the blockchain platform behind the popular game Axie Infinity, announced its plans to re-integrate with Ethereum by early 2026. Ronin had initially moved off the Ethereum mainnet in response to network congestion. Jeffrey “Jiho” Zirlin, co-founder of Sky Mavis (the developer of Axie Infinity and Ronin), indicated that Ethereum’s scaling improvements were a key factor in this decision.
High-Value DeFi on Ethereum L1
Despite the growing adoption of L2s, the Ethereum L1 continues to be a dominant force for high-value DeFi protocols. It boasts a substantially higher Total Value Locked (TVL) compared to its nearest competitors, reinforcing its position as a central hub for decentralized finance activities.
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