Layer 2 protocols ought to gain a bit more value since they are independent. The key problem is whether these protocols can actually achieve that.
The Advantage of Layer 2 Protocols Over Ethereum
In the most recent episode of Unchained, there is mention of the uniqueness of Layer 2 protocols in terms of their role in the blockchain ecosystem, as they do not face some of the limitations that affect Ethereum itself. Because Layer 2 protocols are free from many of the scaling and congestion issues that plague Ethereum, it is theoretically possible for Layer 2 protocols to perform better and facilitate quicker and cheaper transactions than Ethereum. Therefore, this independence gives them an additional benefit with respect to their appeal to individuals looking for alternative platforms to use, because Layer 2 protocols provide a better experience than the congested public blockchain.
Expert Views: Why Layer 2 Protocols Should Capture More Value
An expert who appeared in an episode of Unchained believes that Layer 2 protocols can generate more revenue due to their independence from Ethereum’s blockchain layers. Layer 2 protocols will be able to innovate through different tech stacks while also providing different incentives, which might help them gain market share. However, the expert warns that this might not happen automatically. There need to be improvements in how protocols work and govern themselves if this is to be achieved.
The Potential Shift to Decentralized Layer 1s
One hypothetical situation that was brought up in Unchained was the idea that all Layer 2 protocols could become fully decentralized Layer 1 blockchains. This means that these protocols would have their own validators and blocks, similar to Layer 1 blockchains. With this change, there would be equal opportunity for all blockchain systems because of competition among the different systems, which may result in fairer scenarios for both users and developers.
However, an expert pointed out that this change is not a simple task. Many pre-existing Layer 2 protocols may fail to function or be fully decentralized if they were made into independently functioning Layer 1s because of the difficulties faced when securing and maintaining security, as well as the inability to attract an adequate number of users.
Consequences for the Blockchain Ecosystem
The emergence of Layer 2 solutions, as they may evolve into Layer 1 solutions, will lead to changed competition in the blockchain world. Such developments can be exciting because they can spur innovation and reduce dependency on ETH; however, the downside is the potential destruction of the ecosystem and loss of network effects.
Source — Unchained: https://www.youtube.com/watch?v=WGxsVIn3r7U