Ethereum Community Faces Internal Pressure Over Layer-2 Networks

According to Cointelegraph, a segment of the Ethereum community is urging the Ethereum Foundation to make decisions that could potentially disrupt the social fabric of the smart contract network by imposing restrictions on Ethereum's layer-2 (L2) networks. This sentiment was expressed by Polygon co-founder Sandeep Nailwal during a March 28 episode of Cointelegraph's Chain Reaction show. Nailwal noted that this type of pressure and anti-L2 rhetoric has emerged during the current market cycle, coinciding with suppressed price action for Ether (ETH). Nailwal emphasized the importance of Ethereum's survival for the viability of layer-2 solutions, stating that undue pressure on developers could lead to decisions that might fracture Ethereum's social fabric. He commended Vitalik Buterin's leadership and his active involvement in the Ethereum Foundation, highlighting Buterin's role as a unifying force within the ecosystem. Nailwal described Buterin as the "DNA" of the network, which has attracted numerous talented developers who are building on Ethereum's base layer. Nailwal also addressed the distinction between settlement and execution layers, arguing that the layer-1 versus layer-2 dichotomy is a flawed perspective on blockchain networks. He identified Bitcoin and Ethereum as the only true settlement layers in the crypto space, with other networks serving as execution layers. Nailwal predicted that in the future, most applications will operate on their own blockchains to avoid gas fees, ultimately posting final transactions to one of these settlement layers. This development is expected to enhance Ethereum's base layer by accruing value from these final settlements and fostering long-term ecosystem growth, leading to seamless interoperability. Critics of Ethereum's execution layers argue that these scaling networks are currently undermining the base layer, resulting in a significant drop in Ethereum L1 revenue by September 2024. Nailwal concluded that, given the differences between settlement and execution layers, no other crypto network poses a real threat to Ethereum, except for the Bitcoin network. However, he noted that Bitcoin would only become a competitor if it adopted advanced scripting options to enable reliable smart contract functionality similar to Ethereum.