Ethereum’s Evolving Landscape: A Resurgence for High-Value DeFi and Strategic Shifts for L2s
Ethereum’s core blockchain, often referred to as Layer 1 (L1), is experiencing a notable revitalization. High-value Decentralized Finance (DeFi) protocols are reinforcing their presence on the mainnet, even as several independent Layer 1 networks strategically transition to become Layer 2 (L2) solutions within the Ethereum ecosystem.
The Enduring Appeal of Ethereum L1 for DeFi
Ethereum L1 continues to solidify its position as a dominant platform for high-value DeFi applications. Its Total Value Locked (TVL) significantly surpasses that of its closest competitors, highlighting its sustained importance in the decentralized finance space. This reassertion underscores Ethereum’s fundamental strengths and its capacity to support substantial financial activity.
L2 Advantages Drive Strategic Transitions
Simultaneously, numerous previously independent Layer 1 blockchains are converging on Ethereum by integrating as Layer 2s. This strategic shift is largely driven by the compelling benefits that the L2 model offers. These include substantial cost savings and the opportunity to leverage Ethereum’s extensive network effects, granting these projects access to a broader user base and developer community.
Celo’s Cost-Saving Transition
One prominent example of this trend is Celo, a mobile-first payments network. Earlier this year, Celo opted to discontinue its dedicated validator network to re-establish itself as an L2 on Ethereum. This move has reportedly resulted in significant operational cost reductions, with estimates suggesting annual savings of nearly $7 million.
Ronin’s Return to the Ethereum Fold
Another notable player, Ronin, the Layer 1 blockchain behind the popular game Axie Infinity, also announced its planned return to Ethereum. This transition is anticipated for early 2026. The original move to an independent chain five years prior was prompted by network congestion on Ethereum. Jeffrey “Jiho” Zirlin, co-founder of Sky Mavis (the creator of Axie Infinity and Ronin), indicated that Ethereum’s scaling progress has been a key factor in this decision.
Leave a Reply