Ethereum’s push towards layer-2 (L2) blockchain scalability could also be a double-edged sword for Ether, probably weakening the worth accrual of the world’s second-largest cryptocurrency, in response to a brand new report from Binance Research.

The report means that Ethereum’s L2 blockchain networks — constructed to enhance mainnet scalability and decrease transaction prices — could also be cannibalistic of the Ethereum base layer, negatively impacting the value of Ether (ETH).

Ethereum’s dominance by way of decentralized change (DEX) quantity and costs generated is “under threat” by Solana and BNB Smart Chain, Binance Research wrote.

The essential elements embody sluggish and costly transactions, fragmented “developer mindshare and liquidity, and reduced value accrual to the L1 due to the rise of L2s,” the report stated.

Ethereum’s roadmap already consists of future upgrades geared toward creating cheaper transactions, further safety, and extra future-proof incentives for the mainnet.

Still, Ether’s worth accrual could proceed to endure within the close to time period for the reason that subsequent two main upgrades don’t instantly handle these points, however are geared toward creating extra scalability round information availability and incorporating extra L2 networks. 

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Concerns have been reignited across the Ethereum mainnet’s financial incentives since Ether’s price fell to $1,410 on April 7, marking its lowest stage since March 2023.

Ether’s worth fell over 61% throughout a four-month downtrend, which began on Dec. 16, 2024, when ETH briefly peaked above $4,100, Cointelegraph Markets Pro information exhibits.

Ethereum’s Pectra, Fusaka improve received’t handle Ether’s worth accrual

After initial delays, Ethereum’s extremely anticipated Pectra upgrade is ready to go dwell on the mainnet on May 7.

The Pectra improve goals to enhance Ether staking and L2 community scalability, improve blob capability to allow extra information dealing with on the mainnet and enhance general community capability.

The Fusaka improve, anticipated in late 2025, will deal with scaling the Ethereum mainnet as an information availability layer by introducing EIP-7594. Fusaka might also convey an replace to the Ethereum Virtual Machine (EVM), leading to a “more structured approach” to smart-contract creation, lowering runtime overhead and bettering developer expertise.

Ethereum’s dedication to L2 scaling could also be a “double-edged sword” as a consequence of considerations across the mainnet’s “competitiveness as a data availability layer” and “the sustainability of value accrual to Ethereum the asset,” the report stated.

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“One promising path for stronger ETH value accrual is the development of based rollups,” which “contribute significantly more in fees” to Ethereum in contrast with L2s like Base, Arbitrum and Optimism, in response to a Binance Research spokesperson.

“Another avenue is Ethereum’s evolving role as a data availability layer,” the spokesperson advised Cointelegraph, including:

“Value accrual through this model depends on external factors: L2s must continue to choose Ethereum for data availability, and blockspace demand must grow in a competitive landscape where alternatives like Solana and BNB Smart Chain are gaining traction.”

“Aligning incentive structures between Ethereum and L2s, whether through fee sharing, MEV capture, or protocol-level integrations, will be essential to ensure sustainable value flow back to ETH as an asset should Ethereum continue to commit to scaling with L2s,” he added.

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