Ethereum Layer-2 Ecosystem Faces Consolidation Amid Overcrowding

The Ethereum layer-2 ecosystem is experiencing consolidation as many general-purpose chains struggle to justify their existence, according to CoinDesk. The closure of Zero Network last month highlighted the challenges faced by these networks, with Ethereum creator Vitalik Buterin urging a rethink of the scaling roadmap. Despite improvements in rollup technology, which have reduced costs and complexity, attracting users remains difficult. Base and Arbitrum dominate the layer-2 DeFi space, accounting for over 80% of total value locked. Industry experts suggest that only layer-2s with clear financial demand and user activity will sustain themselves, as the barriers to attracting users continue to rise.