Kevin O’Leary Highlights Crucial Factors That May Reverse the Bearish Trend
Ethereum Co-founder Joe Lubin Emphasizes Layer-2 Networks
Ethereum co-founder Joe Lubin recently spoke at the Digital Asset Summit, highlighting the importance of layer-2 (L2) scaling solutions for Ethereum’s future. Lubin believes these networks will remain central to Ethereum’s ecosystem, providing essential scalability and performance improvements.
In an exclusive interview with Cointelegraph, Lubin stated:
“The Ethereum ecosystem is so big and so mature that it will be best for new kinds of databases — new kinds of layer 2 networks — to set up shop, as layer 2s of Ethereum. We have our own that has some great characteristics called Linea.”
Lubin also mentioned another promising layer-2 solution, MegaETH, which is expected to launch soon. He argued that newer layer-1 blockchains would struggle to compete with Ethereum’s established security and robust architecture.
Investor Concerns Over Ethereum’s Layer-2 Approach
Despite Lubin’s optimism, investors have expressed concerns about Ethereum’s reliance on layer-2 networks. Critics argue these solutions act as “parasitic” elements, draining revenue from Ethereum’s base layer without significantly contributing economic value.
- Ethereum’s average gas fees dropped by 95% following the Dencun upgrade in March 2024.
- This fee reduction led to a 99% collapse in Ethereum’s base-layer revenue by September 2024.
- Ether (ETH) prices have declined significantly, recently hitting a low of approximately $1,759 on March 11.
ETH ETF Outflows Reflect Broader Market Sentiment
Data from Farside Investors indicates continued outflows from Ether exchange-traded funds (ETFs) for 11 consecutive days, reflecting broader bearish sentiment in crypto markets. The largest single-day outflow occurred on March 13, with investors withdrawing $73.6 million from ETH ETFs as they shifted toward safer assets like cash, government securities, and stablecoins.
Quick Summary
- Joe Lubin emphasizes the importance of Ethereum’s layer-2 scaling solutions.
- Investor skepticism grows due to declining Ethereum base-layer revenues and ETH price.
- Significant outflows from ETH ETFs indicate broader market caution.
Related: Ethereum pushes back Pectra upgrade to conduct third testnet ‘Hoodi’
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