Ethereum News Today: Ethereum's L2 Obsession Risks Undermining Decentralization's Soul

The growing reliance on Layer-2 (L2) scaling solutions has sparked a debate over whether Ethereum’s strategy is undermining its foundational principles, according to Steven Pu, co-founder of EVM-compatible Layer-1 blockDAG Taraxa. Pu argues that while L2s offer scalability benefits, their centralized nature compromises the decentralization and trustlessness that define blockchain technology. He warns that Ethereum’s support for L2s may ultimately erode user confidence and liquidity in the base layer [1].

Pu describes L2s as centralized systems that operate “like a single cloud server,” lacking the governance, consensus, and trust mechanisms that make blockchain unique. He emphasizes that the facade of decentralization provided by L2s creates a misleading sense of security among users. “The problem here is not that something is ‘good enough’ or ‘secure enough’,” Pu said, “the problem is that it’s no longer crypto, just a single cloud server like any web2 application.” According to him, this misrepresentation of centralized systems as decentralized is a fundamental issue undermining the credibility of the broader blockchain ecosystem [1].

Ethereum’s roadmap has increasingly prioritized L2s as a key component of its scaling strategy. However, Pu views this approach as “fundamentally flawed” and potentially self-defeating. He argues that L2s are not only centralizing the user experience but also diverting attention and liquidity away from Ethereum’s base layer. “As L2s grow, they will naturally begin to drain liquidity and mindshare away from Ethereum,” he said. Pu further warned that if L2s eventually decentralize, they would effectively become independent Layer-1 blockchains, directly competing with Ethereum [1].

The implications of Ethereum’s L2-centric strategy, according to Pu, extend beyond just centralization. He noted that Ethereum’s development focus has shifted toward addressing the technical demands of L2s, potentially at the expense of improving the base layer itself. “Ethereum’s roadmap is now dominated by how to more effectively serve L2s’ technical demands,” he said. “This takes away resources that could have been dedicated to enhancing Ethereum’s own L1’s performance.” In Pu’s view, this shift weakens Ethereum’s long-term competitiveness and resilience in the evolving blockchain landscape [1].

Despite these criticisms, Pu acknowledges that centralization is not inherently a bad thing. He argues that the issue lies in misrepresenting centralized systems as decentralized. “It’s fine to be centralized,” he said, “It’s not fine to lie about it.” This perspective highlights the ongoing tension within the crypto industry between scalability, decentralization, and the need for user-friendly solutions. As L2s continue to gain traction, the challenge for Ethereum—and the broader blockchain community—will be to balance these competing priorities while preserving the core principles that define the technology [1].

Source: [1] Taraxa's Steven Pu Says Ethereum Is “Digging Its Own Grave” with L2 Strategy (https://www.ccn.com/news/crypto/taraxas-steven-pu-says-ethereum-is-digging-its-own-grave-with-l2-strategy/)