Ethereum is expanding rapidly, and Layer-2 solutions are at the heart of that growth. These tools boost performance and cut costs, letting users transact faster and cheaper. But while they improve scale, they introduce a major issue. As more transactions shift away from the base chain, the demand for ETH weakens. That puts Ethereum’s native asset at risk, even as the ecosystem flourishes.
Scaling Through Rollups
Rollups are Ethereum’s chosen method to scale. They process data off-chain and send compressed summaries back to the mainnet. This technique boosts efficiency and reduces fees. Platforms like Arbitrum, Optimism, and Base now dominate L2 activity. Billions in assets move across them daily.
However, many of these transactions avoid using ETH directly. That reduces gas usage and lowers the burn rate. In theory, scaling should help ETH grow in value. But in practice, it can lead to less demand for the asset that powers Ethereum.
The ETH Utility Gap
ETH gains value through network activity. When users pay gas fees, some ETH gets burned, decreasing supply. With strong demand, ETH becomes deflationary. But when usage shifts to rollups, the link between activity and ETH weakens. Less gas is used, and fewer tokens are burned.
That breaks the connection between Ethereum’s success and ETH’s performance. Rollups make the chain faster, but ETH holders may no longer benefit directly. Without a better design, the token risks becoming less important over time.
L2 Is Winning
Layer-2 platforms have taken over most Ethereum activity. Users and developers prefer them due to low fees and faster confirmations. Mainnet activity has dropped significantly. As a result, base layer gas usage is down, and ETH burns less often.
ETH’s value model is built on scarcity and demand. But both are fading. Without strong utility across L2s, the token may lose relevance. Ethereum needs to find new ways to keep ETH involved in every part of the ecosystem.
What’s Coming in Ethereum Upgrades
The Ethereum roadmap includes big changes. Updates like Pectra and proposals like proto-danksharding aim to enhance throughput and storage. These tools support more rollups and better performance. They make Ethereum more scalable, but they don’t solve ETH’s declining role.
Efficiency is useful, but Ethereum must also strengthen ETH’s economic role. The token needs to become essential again. Otherwise, users may forget why they need ETH in the first place.
Rollups Depend on Ethereum, But Not ETH
Most rollups post their data back to Ethereum’s base layer. That’s how they stay secure. Still, many rollups use their own tokens for incentives and governance. ETH is often used only when required, and even then, not always as the preferred currency.
This weakens ETH’s network effects. As rollups scale and launch their own ecosystems, ETH becomes less central. Ethereum grows in usage, but not in value for its main token. This imbalance must be fixed before it becomes permanent.
Bringing ETH Back to the Center
Ethereum’s developers and community need to design new incentives. ETH must power more than just gas fees. Some proposals could help:
- Shared Sequencers: Rollups could use ETH-backed sequencers that share rewards with stakers.
- Blob Fee Auctions: As data becomes more valuable, rollups might bid in ETH for storage space.
- Fee Routing: ETH could be used for paying L2 fees directly, or burned on the mainnet even for off-chain actions.
- Governance Alignment: ETH-based voting across rollups could increase its long-term utility.
These solutions would link ETH directly to the success of L2s. That way, every upgrade and every rollup would benefit the token as well as the chain.
Decentralization Must Survive
Many Layer-2 solutions today rely on centralized parts. Sequencers, bridges, and admin controls are often controlled by small teams. That goes against Ethereum’s principles. If left unchecked, Ethereum’s future might be fast but centralized.
To prevent this, Ethereum must push rollups to adopt permissionless sequencers and decentralized governance. These tools protect the network’s values while still enabling scale. ETH also needs to be the anchor for these features, giving users and developers a reason to keep it in play.
The Competitive Threat
Ethereum isn’t the only chain trying to scale. Competitors like Solana, Avalanche, and others offer cheap, fast transactions directly on their base layers. They don’t rely on rollups. That makes them simpler for new users. If Ethereum becomes too complex or fragmented, it risks losing its lead.
That’s why the ETH token must remain central. Without it, users may prefer other ecosystems where the core asset has clear utility. Ethereum must offer both scale and strong incentives tied to ETH, or it could fall behind in adoption.
ETH’s Future Is on the Line
The next generation of Ethereum will be built on rollups. But if ETH is sidelined in that future, its price and purpose will fade. Ethereum must avoid that outcome. The community must prioritize ETH integration in every new upgrade, tool, and proposal.
That means ETH should be used for more than staking or governance. It should secure data, route fees, and act as the key asset for economic alignment. If that happens, ETH can thrive even as the base layer becomes less visible to end users.
Closing Thoughts
Ethereum’s progress is impressive. Rollups are making the chain faster and cheaper. But this success could leave ETH behind if action isn’t taken soon. The ecosystem needs new structures that reward ETH holders as the network scales.
Aligning ETH with L2 growth is not optional—it’s essential. Without it, Ethereum’s token may lose its role as the fuel of the future. But if done well, ETH can become even more valuable in a world where Ethereum powers millions of users across multiple layers.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research.
