Myles
@myles-cooks
Yes the rollup is a separate chain with its own token, corporation, and foundation, and yes it has the app that directly controls the user experience, and yes it’s not currently interoperable with the rest of the ecosystem, and yes it runs a centralized sequencer that earns millions of dollars a year in revenue. But it’s *completely* aligned with the base layer. Makes perfect sense.
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Devin Baker
@devinbaker.eth
I’m aligned I’ve similarly been confused by this debate Grow the GDP of the ecosystem, benefits all players I think it’s a think long-term vs. short-term thinking difference
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Myles
@myles-cooks
I was actually being kinda sarcastic here. I tend to see these L2s as more parasitic, while a lot of people seem to insist they’re good for the base layer. I’m not convinced.
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Devin Baker
@devinbaker.eth
Hahahah touché 🤝 We shall see
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Devin Baker
@devinbaker.eth
As an aside, thought you might find this interesting This is a pretty good encapsulation of my POV on ETH L1 vs. L2 Fees down (for now) but generally increased demand as money/value This slide is from @a16zcrypto's state of crypto report which rocks, worth a read more broadly https://warpcast.com/rsa.eth/0x3a97bc97
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Myles
@myles-cooks
Read the report this morning and enjoyed it! I feel like I have a few concerns. 1. I think that a lot of these L2s will be incentivized to eventually just become an L1. So many of them have their own native tokens, and they realize that L1 tokens accrue the most value. So there's an incentive there. I'm not sure how loyal they will be to Ethereum. 2. What if gas fees just get paid in the native token or stablecoins? That could ultimately be much better for users and decrease demand to hold ETH. 3. I personally think BTC is outcompeting ETH as money, and more people will want to hold BTC as SoV long-term. And I think that Ethereum's tech/utility thesis is being challenged by other L1s and L2s. So it leaves ETH as an asset in a tough spot. Please tell me why I'm wrong! Here to learn.
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Devin Baker
@devinbaker.eth
Loving the back-and-forth Here's what I'd say: 1. Ethereum's dedication to driving L1 fees as low as possible mitigates this. Fees will become so low that they're not material enough to sacrifice security and decentralization of Ethereum's L1 (which is the core advantage over other L1s, incl. SOL - re: SOL, the L1/L2 dynamic on ETH makes me skeptical that ETH disappears (though I own both - I remain a multi-chain thesis kinda guy)) 2. On L2s? It doesn't matter - in fact, it's better if/that it happens (and already does) because user experience is better. But regardless of how fees get paid from user -> L2, the L2 has to pay fees to Ethereum L1 in ETH (hence why growing the GDP of the Ethereum ecosystem, including through L2s still benefits ETH) 3. Agreed that BTC outperforms ETH on the SoV money vector. I also think about ETH as having large part of value due to tech platform thesis. I hear you on the competition, and I think that's a super valid analysis. Ultimately comes down to PoV on above points imo.
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Myles
@myles-cooks
Good points across the board. My concern (as it still stands) kind of addresses both 1 and 2. I don't think that L2s are incentivized to become L1s because of fees, specifically. I think that they're incentivized to do so because it makes their native token more valuable. And I think that incentive probably outcompetes an altruistic desire to be more decentralized/secure. I say altruistic because I think a lot of end users don't care about that so much. I don't really buy the "premium blockspace" argument-- look at how much USDT activity happens on Tron. Users like cheap/fast. The L2s have their own native tokens that they're incentivized to drive value towards, *and* they'll likely be closer to the end user than the L1. So I think the incentive is to break off and create their own L1 chain, stop paying rent to ETH mainnet, and drive more value to their own native token.
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