Ethereum co-founder Joe Lubin says layer-2 (L2) scaling networks will continue to be central to the Ethereum ecosystem.

Ethereum co-founder Joe Lubin discussed the future of the smart contract network at the Digital Asset Summit and said layer-2 (L2) scaling networks would continue to be central to the Ethereum ecosystem.

The co-founder of Ethereum, Joe Lubin, has discussed the future of the smart contract network at the Digital Asset Summit, where he highlighted the importance of layer-2 (L2) scaling networks to the ecosystem.

In an exclusive interview with Cointelegraph’s Turner Wright at the Summit, Lubin explained how applications will require next-generation databases powered by high-throughput blockchain technologies. He added that these new applications are being developed on scaling networks like StarkNet and Optimism, which can process thousands of transactions per second.

“Another great application, or great layer 2, that’s emerging soon is called MegaETH,” Lubin continued.

The Ethereum co-founder went on to say that although newer layer-1 chains are being built, they will likely struggle to compete with Ethereum, which already features robust architecture and security guarantees. This is especially true given that developers and users are already familiar with the Ethereum Virtual Machine (EVM), which serves as the core programming environment for the majority of Web3 dapps.

Investors have doubts about layer-2 approach

According to L2Beat, there are currently over 140 unique scaling solutions for Ethereum, including 60 rollup networks.

However, investors have come to view these layer-2 networks as parasitic elements that drain the layer-1 network of revenues while contributing minimal economic value to the base layer.

After the Dencun upgrade in March 2024, Ethereum's average gas fee dropped by 95%, which dramatically lowered transaction fees for layer-2 networks. This reduction in transaction fees caused a 99% collapse in revenue on the Ethereum base layer by September 2024.

Network fees on the Ethereum layer-1 flatline following the Dencun upgrade. Source: The TIE Terminal

Since that time, the price of Ether (ETH) has generally been in decline, plummeting to a recent low of approximately $1,759 on March 11 and leading many analysts to predict a further price decline in 2025.

Data from Farside Investors shows outflows from Ether exchange-traded funds (ETFs) have continued for 11 consecutive days amid a broader downturn in the crypto markets.

The most significant day of outflows occurred on March 13, when investors pulled a collective $73.6 million from ETH ETFs as they dumped risk-on assets for less volatile alternatives such as cash, government securities and dollar-pegged stablecoins.