CoinDesk asserts that the global growth of cryptocurrencies as a new investable asset class will alter how the internet operates. New business model analyses, measurements, benchmarks, reporting and audit structures, data suppliers, and buy- and sell-side research structures will result from this. To properly analyze crypto networks, protocols, and applications, investors must be familiar with ideas like Metcalf’s Law, Moore’s Law, Lindy effects, open-source technologies, composability, and the 10-year window.
Ethereum is getting close to its “broadband moment,” when throughput issues are solved by a layer-2 blockchain, allowing for scalable infrastructure to handle new apps and the subsequent billion users. Transactions on Ethereum’s three main L2 scaling solutions (Arbitrum, Optimism, and Base) have increased by 3,438% in less than two years. To effectively evaluate and forecast value accrual within the tech stack, investors must have a thorough understanding of the economic relationship between L2 and L1. With L2s keeping an average of 23.5% of all transaction costs and Ethereum validators collecting the remaining 76.5% of user transaction fees paid on L2, L2s are complementary to Ethereum and its associated currency, ETH.
This should eventually lead to a rise in the adoption of Ethereum L1, as L2s continuously reduce prices and enable better user experiences. However, as new competitors enter the market and Moore’s Law continues to hold true, L2 margins are anticipated to contract over time. Understanding how value is created and captured at each layer is essential for providing advice to customers or making investments inside the crypto tech stack.