Layer2 Ecological Dilemma Can Blast Break the Stalemate in the Industry?

Breaking the Stalemate Can the Blast of Layer 2 Ecological Dilemma Revitalize the Industry?

Author: Haotian, Crypto Observer, Source: X (originally on Twitter)@tmel0211

Blast has shocked the stagnant Layer2 market in just two days, pushing TVL to over $200 million at an astonishing speed, as if the “vampire has arrived.” With multiple factors such as PUA tasks, airdrop bait, and Vitalik-style internal collapse driving the influx of Blast, it has completely exposed the bottom line of Layer2. I believe:

The sudden attack on Layer2 by Blast may not be its recipe for success, but it is a blessing for the Layer2 industry.

Why do I say that? We can reflect on the current situation of the Layer2 industry from a macro perspective to better understand it.

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1) According to data from L2beat, there have already been over 60 Layer2 projects emerging, involving various categories such as OP-rollup, ZK-rollup, Validium, Plasma, etc. However, most of these projects are still in the stage of technical architecture and narrative construction. The debate around OP-rollup and ZK-rollup continues, with ZK-rollup eventually winning out technologically, followed by the emergence of many distinctive ZK-rollup solutions.

Starknet is the first to achieve open source and decentralization of the Prover component, with an ultimate TPS surpassing 890k+. Scoll and Taiko are favored for their more equivalent EVM, zkSync is highly acclaimed for its hidden ERC4337 account abstraction experience, and the recent zk+Plasma may trigger a new narrative again, and so on.

The high-profile VCs and crypto enthusiasts are busy with action. The Layer2 market is witnessing unprecedented technological narrative prosperity. But is this the endgame of Layer2 scalability?

2) Setting aside technical factors, in terms of the ecosystem, OP-rollup’s Arbitrum and Optimism have already taken a lead with overwhelming ecological advantages. Arbitrum boasts over 600 ecological protocols and TVL of over $700 million, while zkSync, considered the endgame rollup, has only developed for over half a year with a TVL of merely $5 million.

Moreover, since the spontaneous token, Arbitrum has not shown significant data growth. The meme season did not happen on Layer2, and Bitcoin is even trying to create a new glory on Layer2.

The entire Ethereum Layer2 ecosystem has been at a stalemate, with few people going deep into exploring the core reasons. I believe this is because Layer2 has not found native applications that can stimulate a strong demand. Pure financial applications, DeFi (DEX, lending, derivatives), these three driving forces cannot promote the growth of the Layer2 ecosystem.

Layer2 should attract the long-tail mass adoption users who are sensitive to gas fees and user experience barriers. If the goal is only to attract financial whales such as miners, farmers, scientists, and institutions who are already stable on the mainnet, then sorry, they are more concerned about “security” rather than performance improvements. Even the criticized centralization and security issues in Layer2 Sequencers have strangely been rationalized. Even the highly praised ZK-rollup, with an increased development threshold on ZK circuits, has not produced some killer applications that are non-ZK compatible.

With such an ecological foundation and no influx of funds from a bull market, Layer2 is bound to find itself in a awkward situation where the technical narrative is grand but the actual ecosystem is weak.

The market is holding its breath, waiting for the KanKun upgrade and hoping for significant breakthroughs afterwards. However, unfortunately, the KanKun EIP-4844 only made some optimizations in gas fees and cannot directly drive the ecosystem’s leap.

3) Let’s take a look at the Stack strategy that the four major Layer2 projects are so proud of. From a long-term narrative perspective, Layer2 modularizes core components such as Sequencers and Provers, and uses these shared components to strengthen Layer2 and Layer3 multi-chains. This strategy seems good, but it feels a bit too focused on immediate gains.

Take zkSync for example, although its ecosystem development is slow, it launched the zk-Stack strategy, suddenly turning zkSync into part of the ecosystem application. This wise move leaves everything to the developer community, with the potential implication that as long as zk-stack develops fast enough, zkSync as an exemplary chain is already pretty good, after all, it has a group of loyal gas-paying users. (Omitted a sentence here %&**&*%)

On the other hand, Optimism has built a solid rationale for a centralized Sequencer with its Op-Stack. After all, sharing the Sequencer and adopting a committee governance approach to build a Superchain to make up for the shortcomings of decentralization is indeed reasonable.

So, the Stack strategy is actually a clever strategy that avoids many shortcomings of Layer2’s current technology and ecosystem, abstracting an advanced strategy. Now it seems that various Stack strategies, besides adding some grander narratives and integrating scarce industry developer resources, will not bring immediate benefits to end users.

In summary,

Getting back to the main point, I believe that blast entering Layer2 is nothing short of stirring up trouble.

In the short term, it will draw away the scarce liquidity that other Layer2s already consider precious. In the long term, allowing a Layer2 that urgently needs development to prematurely embrace an idle way of earning completely goes against the original intention of Layer2’s scalability ecosystem.

blast directly hits the poison of LianGuairadigm’s web3 tokenomics economics, seeing the current lifelessness of the Layer2 ecosystem and attempting to inject a strong dose of medicine.

From the perspective of building Layer2, this starting point is wrong. Regardless of how high the TVL is or how large the user base is, it is only an internal market consumption. The success of individuals is not of great significance, but from the perspective of disrupting the industry, it deserves applause.

It can be foreseen that blast’s disruption may have two direct impacts:

1) A wave of Layer2 token launches. If blast draws away most of the market’s liquidity, what other choices do the relatively obscure Layer2 players, such as other ZK-rollups, have besides launching tokens to stimulate inflows? Even if they are not in a hurry, the VCs who have invested heavily behind them will push hard.

2) Layer2 reshuffling, there are already too many Layer2 solutions in the market, so it’s time for a shakeup, survival of the fittest. Especially some hastily put together or rushed Layer2 projects will be exposed for what they truly are, which will bring a fresh dynamic to the Layer2 market.

In conclusion, while blast may not bring the same DeFi summer of governance tokens to Layer2 like compound did, it will at least expedite the industry towards the eve of summer.

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