A segment of the Ethereum community is urging the Ethereum Foundation to take actions that could potentially “disrupt the entire social structure” of the smart contract network by imposing limitations on Ethereum’s layer-2 (L2) solutions, according to Sandeep Nailwal, co-founder of Polygon.
During a recent episode of a show on X, Nailwal expressed that he has observed this level of pressure and the negative sentiment towards L2 networks only during the current market cycle, which has seen diminished price activity for Ether (ETH).
“Everyone is aware that if Ethereum fails, the layer-2 solutions will not last either,” Nailwal remarked, further stating:
“The Ethereum community must avoid putting undue pressure on developers — I shouldn’t have the ability to influence developers significantly for price fluctuations and similar reasons, as it could lead to decisions that fundamentally harm Ethereum’s social fabric.”
He commended Vitalik Buterin’s leadership and his more proactive involvement with the Ethereum Foundation, noting that Buterin has been crucial in maintaining unity within Ethereum’s ecosystem.
Nailwal referred to Buterin as the “DNA” of the network, which has drawn numerous talented developers over the years to build on top of Ethereum’s foundational layer.
Nailwal argued that the distinction between layer-1 and layer-2 networks is a flawed perspective regarding blockchain systems. He identified just two settlement layers in the entire crypto landscape: Bitcoin and Ethereum, suggesting that all other cryptocurrency networks operate as execution layers.
He predicted that in the future, nearly every application will establish its own blockchain to circumvent gas fees and will finalize transactions on one of these settlement layers. As a result, Ethereum’s base layer stands to gain from this surge of execution layers, acquiring value from these final settlements, thus fostering the long-term advancement of an ecosystem that will eventually achieve smooth interoperability.
Critics claim that Ethereum’s execution layers are currently undermining the base layer, leading to a staggering 99% decline in Ethereum L1 revenue by September 2024.
Nailwal concluded that owing to the distinctions between settlement and execution layers, no other cryptocurrency network truly poses a challenge to Ethereum, except for Bitcoin. He suggested that the only potential threat from the Bitcoin network would arise if it adopted more sophisticated scripting capabilities that provide reliable smart contract functionality similar to that of Ethereum.