Anti-L2 push could ‘break the social fabric’ of Ethereum — Sandeep Nailwal

A portion of the Ethereum community is pressuring the Ethereum Foundation to make decisions that may “break the entire social fabric” of the smart contract network by restricting Ethereum's layer-2 (L2) networks, Polygon co-founder Sandeep Nailwal said.

Speaking during a March 28 episode of Cointelegraph's Chain Reaction show on X, the Polygon founder said that he has only seen this type of pressure and anti-L2 rhetoric during the current market cycle amid suppressed price action for Ether (ETH).

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“Everybody understands that if Ethereum doesn’t survive, the layer-2s won’t survive,” Nailwal said, adding:

The Polygon co-founder praised Vitalik Buterin’s leadership and his more active role in the Ethereum Foundation, saying he has been the biggest force in keeping Ethereum's ecosystem cohesive.

Nailwal characterized Buterin as the “DNA” of the network that has attracted many talented developers over the years who are building layers on top of the Ethereum base layer.

The total value secured across Ethereum’s scaling solutions. Source: L2Beat

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According to Nailwal, the layer-1 vs layer-2 dichotomy is the wrong way to think about blockchain networks.

The Polygon founder defined only two settlement layers in all of crypto, Bitcoin and Ethereum, with all other crypto networks being execution layers.

In the future, almost every application will have its own blockchain to avoid paying gas fees and will post final transactions to one of these settlement layers, Nailwal said.

Ethereum's base layer will benefit from this explosion of execution layers, accruing value from these final settlements and promoting the long-term growth of the ecosystem, which will one day be seamlessly interoperable.

Ethereum base layer fees drop following the Dencun upgrade. Source: The Tie Terminal

Critics of Ethereum's execution layers say that the scaling networks are currently cannibalizing the base layer, which culminated in a 99% drop in Ethereum L1 revenue by September 2024.

Nailwal concluded that due to these differences between settlement and execution layers, no other crypto network is real competition for Ethereum except the Bitcoin network.

However, the only way the Bitcoin network could be a threat to Ethereum is if it adopted more advanced scripting options that give it reliable, smart contract functionality like Ethereum, Nailwal said.

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