Ethereum’s push toward layer-2 (L2) blockchain scalability may be a double-edged sword for Ether, potentially weakening the value accrual of the world’s second-largest cryptocurrency, according to a new report from Binance Research.
The report suggests that Ethereum’s L2 blockchain networks — built to improve mainnet scalability and lower transaction costs — may be cannibalistic of the Ethereum base layer, negatively impacting the price of Ether (ETH).
Ethereum’s dominance in terms of decentralized exchange (DEX) volume and fees generated is “under threat” by Solana and BNB Smart Chain, Binance Research wrote.
Ethereum, Solana, BNB, DEX volume. Source: Binance Research
The main factors include slow and expensive transactions, fragmented “developer mindshare and liquidity, and reduced value accrual to the L1 due to the rise of L2s,” the report said.
Ethereum’s roadmap already includes future upgrades aimed at creating cheaper transactions, additional security, and more future-proof incentives for the mainnet.
Still, Ether’s value