Ethereum’s Evolving Landscape: A Resurgence of Layer 1 and Strategic DeFi Moves
Ethereum’s core blockchain (Layer 1) is witnessing a renewed focus from significant decentralized finance (DeFi) projects. This trend highlights the network’s enduring appeal for high-value applications, even as other platforms strategically integrate with its ecosystem.
DeFi Giants Re-Embrace Ethereum Layer 1
Leading DeFi protocols like Synthetix and Aave are emphasizing their operations on the Ethereum Layer 1. This move underscores the Layer 1’s continued importance for projects requiring robust security and decentralization.
Ethereum Layer 1 currently boasts a total value locked (TVL) seven times greater than its closest competitor. This dominant position reflects its foundational role within the broader blockchain ecosystem.
Alt-L1s Transition to Ethereum Layer 2
In a parallel development, several alternative Layer 1 (alt-L1) blockchains are choosing to transform into Layer 2 (L2) solutions on Ethereum. This strategic shift aims to leverage Ethereum’s network effects and enhance cost efficiencies.
Industry insights suggest that the L2 model can offer substantial financial benefits, potentially saving projects millions annually in operational expenses.
Celo’s Shift to an Ethereum L2
Mobile payments network Celo, for instance, transitioned its validator network to become an Ethereum L2. This move is projected to save the project approximately $7 million in yearly operating costs, according to the project’s public statements.
Ronin’s Planned Return to Ethereum
Gaming blockchain Ronin has also announced its intention to integrate with Ethereum as an L2 in early 2026. This decision marks a full-circle journey, as network congestion previously led its popular game, Axie Infinity, to operate off the Ethereum mainnet.
Jeffrey “Jiho” Zirlin, co-founder of Sky Mavis, the creator of Axie Infinity and Ronin, noted that Ethereum has largely delivered on its scaling roadmap. This development is seen as a key factor in Ronin’s decision to return to the Ethereum ecosystem.
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