Ethereum Foundation Publishes Article: Restructuring the Division of Labor Between L1 and L2 to Build the Ultimate Ethereum Ecosystem

Authors: Josh Rudolf, Julian Ma, and Josh Stark

Compiled by: Chopper, Foresight News

The ultimate goal of the Ethereum Foundation's Platform team is to promote the scaling of Ethereum as a unified and synergistic system, allowing all users to use it with peace of mind. This article aims to share our perspective on the relationship between L1 and L2, explain the role of each layer, and how we (as an ecosystem) can leverage the strengths of L1 and L2 to create the most attractive platform for all users. Some of this is already clear, while other aspects require ongoing experimentation and iteration with the community and users to validate.

TL;DR

Goal: All individual and institutional users should have a clear path to utilize, extend, and benefit from the core properties provided by Ethereum. The best way to achieve this is to fully leverage the unique functions of each layer, strengthen Ethereum's core properties, and use these properties to deliver meaningful value to end-users.

As the Ethereum ecosystem evolves, the role of each layer also evolves:

• Past: The primary mission of L2 was to help Ethereum scale, with providing differentiation and customization space being secondary. Scalability was the key.
• Present: The primary mission of L2 is to provide differentiated functions, services, customized solutions, marketing strategies, and control zones while achieving scaling capabilities. Currently, the biggest drivers are differentiation, control, and innovation.
• L1 serves as the truly permissionless and maximally resilient global settlement, shared state, liquidity, and DeFi hub. A strong, scalable L1 that does not compromise CROPS (Censorship Resistance, Openness, Privacy, and Security) provides a better foundation for the L2 layer.
• L2 provides valuable new features, customization, and control to develop their own on-chain economies, while extending Ethereum's core properties to more users. Strong L2 networks strengthen the Ethereum ecosystem and its focus.

L2 covers all aspects, establishing differentiated binding relationships with L1 according to their own needs:

• Those L2s seeking the closest integration with L1 should strive for synchronous composability, full interoperability, shared liquidity, and mechanisms like native Rollups.
• L2s with various business models or technical expertise will continue to play important roles in the ecosystem, all providing exclusive capabilities that L1 cannot cover.

The Ethereum Foundation (EF) will continue to develop underlying technologies to help L2s seamlessly extend L1's native features and securely enable cross-layer and cross-chain liquidity and asset interoperability; it also requires L2s to be transparent and clearly publicize their security attributes and verification standards. In short, both sides play important roles, and actions must match words.

Introduction

Over the past five years, a vast L2 ecosystem has emerged around Ethereum L1. Various L2s inherit different native properties of Ethereum: some fully replicate the decentralized architecture (e.g., Stage 2 Rollup), some inherit partial security features (e.g., Validium, Prividium), and some are only compatible with the general EVM standard (not L2). Many chains are still under development, often starting as independent chains and gradually integrating deeply into the Ethereum L1 ecosystem.

It is time for the Ethereum Foundation (EF) and the broader Ethereum ecosystem to update our understanding of the relationship between L1 and L2 networks. The last update was arguably five years ago when the rollup-centric roadmap was first proposed as a path to scale Ethereum.

Since then, much has changed. The technology enabling L2s to share Ethereum's security and liquidity and interoperate with it has matured; the differentiated competitiveness and user value of L2s have become increasingly prominent; L2s themselves have grown and nurtured independent community ecosystems; the scaling roadmap for the L1 layer has also evolved and become clearer. The Ethereum ecosystem needs to face these changes and learn from past successes and failures.

Over the past few months, the future direction of the relationship between Ethereum L1 and L2 has gradually become clear:

• A thriving Ethereum ecosystem must be built on a strong L1 foundation.
• Ethereum L1 will achieve orders-of-magnitude scaling while maintaining the highest levels of security and decentralization, continuing to serve as the core of the on-chain economy and the center of DeFi.
• In the future, an ecosystem of independent and interoperable L2 chains will emerge, offering higher levels of customization, control, and functionality that L1 cannot provide. These L2 chains choose to root themselves in the Ethereum ecosystem because it is the best choice for their users, communities, or businesses.
• L2 chains will both compete and cooperate to provide a wide variety of specialized block space, services, and assets.

This article aims to explain the symbiotic vision of L1 and L2 in more detail and chart a path for a mutually reinforcing relationship between Ethereum L1 and any chain that wants to root itself and become part of the ecosystem.

What roles do L1 and L2 play, and how do they work together?

Ethereum L1 is the world's top programmable blockchain, unmatched in user adoption, developer ecosystem, decentralization, resilience to risks, and underlying stability. Ethereum L1 is the core of the DeFi ecosystem, aggregating the deepest liquidity in the entire network.

Ethereum L1 now has a clear scaling path while maintaining decentralization and security. Thanks to the joint efforts of numerous teams in the Ethereum ecosystem, zero-knowledge (ZK) technology has developed much faster than expected. In the coming years, we will be able to increase Ethereum L1's capacity by several orders of magnitude while adhering to its core value vision.

At the same time, no single public chain can bear the demands of the global, diverse on-chain economy. Even if Ethereum firmly occupies the leading position in the future and its scaling capability increases 1000-fold, there will still be many different chains because they provide specialized and customized services that even L1 cannot offer:

• Specialization for specific applications or use cases
• Non-EVM functionality
• Additional privacy guarantees
• Pricing mechanisms or transaction inclusion logic
• Ultra-low latency or other sequencing characteristics
• Extreme scaling characteristics that L1 cannot match
• Specialized economies, market entry strategies, and growth methods
• Modular design to meet compliance or other business needs
• Other improvements or innovations that can iterate and deliver faster than L1
• ......

This provides an opportunity for L1 and L2 to establish a mutually beneficial relationship, with each focusing on complementary roles.

Why would other independent public chains want to become Ethereum's L2?

• Low cost. Compared to independent underlying public chains, L2s can replicate Ethereum's top-tier security and decentralization at an extremely low threshold; building a global decentralized validator network is costly, time-consuming, and extremely difficult. L2s can transfer this responsibility to Ethereum L1, paying on-demand without bearing high fixed setup costs.
• Users and developers. Interoperability with the largest L1 and L2 cluster in the entire network provides access to more users and developers; interoperability and cross-chain user experience will accelerate due to the maturity of zero-knowledge proof technology, real-time proofs, faster L1 finality and L2 settlement, and proxy infrastructure.
• Interoperability. If designed properly, L2s can securely access L1 assets and DeFi liquidity, user accounts on L1, and any services on L1, such as oracles, ENS.
• Marketing: Being part of the Ethereum ecosystem offers advantages in terms of brand and reputation. The Ethereum ecosystem has the best reputation, security record, and regulatory recognition among all L1s.

What does Ethereum L1 gain from this? Based on our experience and discussions with various stakeholders in the ecosystem, we believe that positioning Ethereum L1 at the core of a growing network of L2s strengthens Ethereum and ETH's unique position in the on-chain economy:

• Creates demand for ETH and provides trust-minimized, secure bridging services between ETH and other assets. ETH functions as both a store of value and currency within the Ethereum network.
• Extends Ethereum's network effects (e.g., EVM, developer education, developer tools, user onboarding, and interoperability between L2 layers)
• Consolidates Ethereum's important position as the core of the multi-chain ecosystem and the primary settlement and liquidity layer for the on-chain economy
• Provides broader business development, growth, and marketing support for Ethereum.
• L2s help realize the core vision of the Ethereum ecosystem. They act as distributed engines for Ethereum's core properties (security, resilience, and stability), maximizing the number of users who derive sustainable value from Ethereum.

The Ethereum ecosystem should not take these advantages for granted. Some of these advantages are still controversial within the community, or are long-term theories that require experimentation, measurement, and analysis to validate. Ultimately, the relationship between L1 and L2 must be mutually beneficial to succeed. Over the past five years, this relationship has achieved much and laid a critical foundation for the future.

What does this mean for the future development of L2?

What does this new vision mean for L2 users, their teams, and their communities?

Here are our suggestions:

• L2s should focus on strategies that complement L1 and achieve platform differentiation. Many L2s have already successfully moved towards this vision. They achieve this through innovative features, targeting specific use cases (e.g., appchains), providing new distribution methods, or adopting novel marketing strategies. This has helped them create their own unique communities and extend Ethereum's properties to millions of new users.
• L2s should have the right to differentiate themselves in various ways according to their vision. We have already seen differentiation in scalability, trustlessness, privacy protection, enterprise compliance, industry sectors, communities, and a range of technological innovations.
• L2s can choose to extend all or part of Ethereum's properties based on their goals. But they should ensure users can easily understand the security properties they do and do not provide. L2s committed to minimizing trust should at least reach Stage 1 and pass the "exit" test, meaning users can safely exit to L1 even in the presence of malicious operators or a failure of the security council. L2s choosing to be closest to L1 and fully inherit its properties should develop towards: 1) reaching Stage 2; 2) synchronous composability; 3) becoming native Rollups.
• L2s should continue to commit to building broader interoperability and shared liquidity mechanisms, thereby enhancing the entire Ethereum ecosystem.
• L2s should continue to operate transparently, clearly explaining their respective security attributes and their relationship with the L1 security layer to the ecosystem.

What is the Ethereum Foundation contributing to build such a world?

To realize this vision for the L1<>L2 relationship, the Ethereum Foundation is fully advancing the following work:

• We are committed to scaling both the L1 layer and blobs without sacrificing decentralization. The current fill rate for blobs is only around 30%, leaving significant room for expansion. We can confidently further scale blobs if needed.
• Specifically supporting those L2s that have or wish to deepen expertise in areas like privacy, security, and trustlessness.
• The Platform team, led by Josh Rudolf, aims to improve the overall performance of the Ethereum platform and serve as the interface between L2s and the core protocol roadmap.
• Improving L1 liquidity to make it easier for L2s to obtain liquidity (faster finality, withdrawals, and deposits).
• Working closely with L2 teams to understand their needs and reflect them in protocol priorities, while clarifying the relationship between L1 and L2. To ensure this relationship works effectively, we need to understand what works, what needs improvement, and collaborate. Our goal is always to clarify and strengthen the value proposition of being part of the Ethereum ecosystem.
• Investing in R&D to achieve "native Rollup" technology, i.e., L2 chains that can be fully and trustlessly verified by L1, enabling synchronous composability and secure interoperability.
• We work with L2Beat and other organizations to closely monitor and verify the security characteristics of L2s. We must rigorously and honestly assess the characteristics of L2s and their degree of connection to L1 security so that users and developers can make informed choices.
• Addressing the main drawback of the multi-chain ecosystem: fragmentation. We will collaborate with the ecosystem (including various chains, wallets, and infrastructure providers) to build better interoperability solutions to address the fragmentation of user experience and developer platforms. Now, with a clear understanding of the relationship between L1 and L2, we can begin to address the fragmentation of the Ethereum narrative.

Together, we will build a global, permissionless on-chain economic system and provide the best platform for all users.