Ethereum R1 Launched to Address Layer-2 Concerns, Fees Drop 99%
1min read A group of developers within the Ethereum ecosystem, operating independently of the Ethereum Foundation, have introduced Ethereum R1, a layer-2 (L2) scaling solution designed to enhance the Ethereum network without incorporating a native token. This project is entirely funded through donations and does not rely on venture capital or pre-mined token allocations, nor does it feature a governance token. The developers emphasized that general-purpose L2s should be simple, replaceable, and free from centralized dependencies or risky governance. They stated, "Ethereum R1 is our answer to that call — the rollup grounded in credible neutrality, decentralization, and censorship resistance."
The announcement reflects growing concerns within the Ethereum community about the current trajectory of many layer-2 scaling solutions, which some view as potentially misaligned with the interests of the base layer. The developers criticized existing L2s for acting more like new layer-1 (L1) blockchains, with private allocations, opaque governance, and centralized control. This critique underscores the community's desire for L2 solutions that prioritize decentralization and neutrality.
Ethereum's Dencun upgrade in March 2024 significantly reduced fees for its layer-2 networks, leading to a 99% collapse in revenue on the Ethereum base layer by September. Consequently, transaction costs on the Ethereum network base layer dropped to a five-year low of roughly $0.16 per transaction in April 2025, due to reduced demand for block space on the base layer. Ethereum's transaction fees are determined by demand and network traffic, with higher demand and traffic resulting in higher fees and more revenue for the base layer.
Critics argue that this situation creates perverse incentives for layer-2 networks to grow at the expense of the base layer. However, protocols continue to assert that Ethereum's many layer-2 networks are a feature rather than a bug. Anurag Arjun, co-founder of the unified chain abstraction solution Avail, highlighted that Ethereum's layer-2 approach offers users a virtually unlimited number of high-throughput chains to choose from, unlike the singular one-size-fits-all approach of monolithic blockchain protocols. This flexibility is seen as a unique value proposition of Ethereum's ecosystem.
