[PART 3] The Ethereum Layer-2 Wars (Here’s How They’ll End)
TL;DR
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Earlier than interoperability is solved, sluggish transfers between L2’s will power the market to make a transparent alternative, leading to one L2 taking the vast majority of the market.
Full Story
When you’re feeling frazzled after that final half — don’t panic, we’re in good fingers!
Ethereum has the biggest quantity of big-brained-developer-types within the area.
Which suggests they’re engaged on a repair!
A repair that basically makes the method of transferring your Ethereum between layer-2’s so quick n’ low cost, that you just gained’t even discover it!
It’ll all simply occur quietly within the background. The friction will probably be gone…and also you’ll be blissfully ignorant to how the mechanics of the alternate works.
(The identical approach you’re with financial institution transfers).
That stated: we nonetheless consider the L2 battle is not going to solely occur, however one clear winner will take many of the market.
Why/How? It’s all about incentives (brief, medium, and long run).
Within the brief time period, most customers aren’t going to need to switch their ETH between layer-2’s, trigger it’s so rattling sluggish n’ clunky (for now).
Within the medium time period, it will incentivize builders to decide on probably the most energetic/standard/effectively funded layer-2 to construct their merchandise on.
(As to not scare individuals off/make it as straightforward as humanly potential for a considerable amount of customers to undertake their product).
In the long run, irrespective of how low cost n’ quick transfers turn out to be between two opposing Layer-2’s — the associated fee to maneuver Ethereum from one individual’s pockets to a different, will at all times be cheaper/quicker if the switch is being made on the identical chain.
And this creates a snowball impact…
Early on, customers will keep away from transferring between L2’s → which is able to drive siloed adoption to a spread of L2’s → the L2 with probably the most adoption will get the vast majority of developer love → by the point these 20+ L2’s turn out to be totally interoperable (aka pleasant with each other), it’ll be too late…
Trigger certain, the charges and velocity of transferring between any/all L2’s will ultimately turn out to be negligible.
However by that point, the market could have selected one dominant chain (alongside a number of runner-ups).
Don’t consider us? The identical factor occurred with e mail.
E-mail is an ‘open protocol’ (aka open algorithm) that anybody/everybody can construct upon, with out prior permission and freed from cost (identical to Ethereum).
But one one e mail platform owns 58% of the worldwide e mail market, whereas the runners up path behind with a % of possession that falls off at a drastic price:
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Apple @ 58.07%
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Gmail @ 29.67%
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Outlook @ 3.42%
Proper now, the highest Ethereum L2 scaling options (by complete worth) seem like this:
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Polygon @ $10.1B
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Arbitrum @ $4.37B
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Immutable @ $3.8B
So how will the L2 wars finish?
With one winner taking most.
Which L2 will that be?
No concept ¯_(ツ)_/¯
