Web3 Needs L1s: Why L2 Hype Is Dangerous

The current crypto narrative is deeply entrenched in the L2 hype cycle. It’s everywhere you look on Crypto Twitter - L2s are more user-friendly, safer, and a superior scaling solution. We need to shift all our focus to their development. While I appreciate an efficient chain as much as the next decentralization maximalist, this mindset is dangerous. This myopic focus on L2s is detrimental to the growth of Web3.

Why Hyperfocus on L2s is Bad For Web3

Here’s the reality: Two primary obstacles hindering user adoption in Web3 are security risks and inadequate performance. While it may seem counterintuitive, our intense focus on L2s exacerbates these issues.

Inattentional Blindness and Centralized Sequencers

This intense focus leads to a phenomenon known as inattentional blindness. We become so fixated on the potential of L2s that we overlook crucial details, much like the famous invisible gorilla experiment. In this case, the gorilla in the room is the centralized sequencers, which introduce a significant point of failure in the L2 ecosystem.

Sequencers are responsible for ordering and submitting transactions to the L1. The problem? They are often controlled by a single entity – the L2 development team. This creates a scenario where sequencers can be halted at will, as evidenced by the recent decision of Ethereum L2 Linea to “pause” its sequencer following an exploit.

This isn’t just a theoretical concern. Centralized sequencers attract regulatory attention. If traditional payment processors like Visa or Mastercard halted transactions for a day due to security fears, they would likely face significant fines and penalties. We need to solve this centralization problem if we want to reach mass adoption.

Overestimating L2 Transaction Capacity

Our L2 hyperfocus also causes us to overestimate their transaction capacity. While L2s were introduced as a solution to the scalability issues of L1s, simply creating more L2s doesn’t fully address the problem of limited throughput, especially if we’re aiming for billions of users.

Shifting Our Focus to L1 Development

Instead of solely focusing on L2s, we need to reallocate some of that energy to L1 development. Developing more L1s offers several benefits:

• Increased Capacity: More L1s provide more base layers for developing L2 solutions, ultimately expanding the ecosystem’s transaction capacity.
• Innovation: New L1s can introduce innovative technological solutions, value capture mechanisms, and operational improvements, just as Solana has significantly contributed to user growth and ecosystem expansion.

Emphasizing L2 development can lead to an over-reliance on a single chain, creating security vulnerabilities and ultimately hindering adoption. A diverse ecosystem, where multiple L1s flourish, is essential for a truly decentralized and equitable digital future.

Looking Ahead

We don’t need to abandon L2s. They are a vital part of the scaling solution. However, by diversifying our focus and dedicating resources to L1 innovation, we can foster a robust, secure, and scalable Web3 ecosystem that is truly ready for mass adoption.