Why has L1 been revitalized under the tide of L2?

Written by: Ignas

Compiled by: Luffy, Foresight News

The more L2s there are, the more optimistic I am about competitive L1s.

The last bull market was the Beta phase for non-Ethereum L1s: Alt-L1s competed for yield-hungry Degens by offering liquidity mining rewards on forked protocols like Aave and Uniswap V2. There was almost no innovation on the application layer outside of Ethereum.

Even non-EVM chains launched EVM sidechains: NEAR's Aurora, Polkadot's Moonbeam, and Cosmos's Kava. EOS EVM and Solana's Neon failed to catch this wave.

The only differences between these chains are:

• Lower gas fees;
• Speed;
• Branding;
• The amount of liquidity mining rewards they can offer.

However, with the onset of the bear market, liquidity mining rewards decreased, and TVL returned to the safer haven of Ethereum.

Worse yet, a new narrative space for Ethereum L2s emerged with Optimism, Arbitrum, and others, promising scalability for Ethereum without compromising security. Additionally, they attracted users with the potential for airdrop expectations.

L1s need to be reshaped, and I’m glad to see them doing so:

Avalanche: Doubling down on scaling through subnets; focusing on asset tokenization; introducing more stablecoins, etc.

Polygon: Becoming the hub for sovereign L2s for any specific application; partnering with OKX to launch new chains.

NEAR: Positioning itself as a monolithic and modular blockchain; collaborating with Polygon to scale Ethereum on the DA layer; NEAR is also providing chain abstraction to L2s through a unified UI (BOS) and L2 account aggregation.

Solana: Leading the wave of monolithic blockchain scaling, enabling fast transactions without a cumbersome modular user experience. I will share more about the Ethereum vs. Solana debate in future articles.

Fantom: Improving monolithic blockchain design through the Sonic upgrade, achieving 2000 TPS without sharding or L2, aiming to attract the next generation of DApps.

BNB Chain: Launched opBNB L2 to reduce fees, but the more significant upgrade is BNB Greenfield, which focuses on data and IP monetization in data finance, as well as decentralized AI (LLM training with privacy protection).

Cosmos: ATOM itself seems to have lost direction in its value proposition, but with the progress of Osmosis, Injective, and Kuji, Cosmos Hub is thriving.

L1s are continuously innovating and specializing, while L2s are becoming the new L1s. Today's L2s are busy attracting forked protocols but lack innovation and diversity.

Unfortunately, many L2 tokens have poor token economics, as evidenced by the controversial "staking" proposal of ARB.

It’s no surprise that established L1 tokens are becoming popular. Compared to the previous bull market, they now offer a more attractive value proposition.

Or is this just a short-term rotation? I hope not.