Are Greedy L2s Killing Ethereum? VC Claims ETH Is ‘Completely Dead’

A venture capitalist has sparked debate in the crypto community by claiming that Ethereum (ETH) is a “completely dead” investment due to the dominance of Layer 2 (L2) networks. According to the critic, these L2 solutions are extracting too much value from Ethereum’s ecosystem, leaving ETH itself with diminishing long-term potential.

The Case Against Ethereum’s Future

Ethereum’s Layer 2 networks, such as Arbitrum, Optimism, and zkSync, have grown rapidly, offering lower fees and faster transactions by processing activity off-chain while still settling on Ethereum. However, some argue that these L2s are capturing the majority of the economic benefits, reducing the incentives for users to hold or stake ETH.

The VC’s concerns include:

• L2 Value Extraction: Profits from transactions and network activity are shifting from Ethereum’s base layer to Layer 2 projects.
• Declining ETH Demand: If users primarily interact with L2s, demand for ETH as “gas” and a store of value could weaken over time.
• Lack of Fee Revenue for Ethereum: As L2s optimize for cost efficiency, Ethereum’s core network could generate less revenue from transactions.

Ethereum’s Defenders Push Back

Ethereum supporters argue that Layer 2 adoption strengthens the network by scaling it efficiently and reducing congestion. They believe ETH’s long-term value is secured through staking, security fees, and continued development of Ethereum’s ecosystem.

While the debate over Ethereum’s future continues, its transition to a more scalable and efficient network remains in progress. Whether Layer 2 dominance ultimately strengthens or weakens ETH’s investment appeal will depend on how the ecosystem evolves in the coming years.