Imposing Tariffs on Ethereum Layer 2 Solutions Is ‘Toxic’ for Growth, Says Scroll Exec

Ye Zhang, co-founder of Layer 2 sensible contract platform Scroll, has sharply criticized proposals to impose charges on Ethereum Layer 2 options.

In a collection of tweets on X, the exec referred to as “tarriffing Layer 2s” “one of the poisonous concepts” for the blockchain’s future.

Ye Zhang Opposes L2 Charges

Zhang argued that such a transfer would commerce long-term scalability and ecosystem development for short-term income, a technique he believes is best suited to centralized companies than to Ethereum’s decentralized mannequin.

He went on to spotlight that Ethereum’s true energy lies not in extracting income via protocol charges however in its potential to function the central asset throughout a rising variety of rollups.

With Ethereum already a dominant power in ecosystems like Arbitrum, Optimism, and zkSync, Zhang advised that extra rollups would result in higher adoption of ETH, increasing its function as a retailer of worth. He warned that imposing charges on Layer 2s might drive builders away and depart Ethereum with restricted scalability and relevance in the long term.

“Ethereum doesn’t have to extract – it must allow. Ship quicker, scale blobs 1000x extra, scale execution to a point. Make Ethereum DA enticing, ideally present extra worth past safety (interoperability, different shared elements, liquidity bridges). Empower extra aligned gamers.”

Worth Leakage Considerations

Whereas Zhang contended that Ethereum ought to deal with enabling Layer 2 growth over imposing charges, the broader financial image presents a rising problem. As execution strikes off-chain, Ethereum’s core community has seen a pointy decline in charge income, which, in flip, has raised considerations about worth leakage.

As reported by CryptoPotato, Ethereum’s charge technology has plummeted from practically $30 million in March 2024 to only $500,000 a yr later, as Layer 2 networks like Arbitrum, Optimism, and Base seize a lot of the financial advantages. The shift has additionally impacted ETH’s burn price, which led to an increase in web issuance and a rise in inflation to 0.79%.