Published:* Jan 1st. EDITED: for errors after :)

Have you seen Ethereum rollups?

How, they continue to fragment Ethereum's liquidity and serve us bad UX?

It's no news fragmentation was the tradeoff Ethereum got for scaling with L2s. But since we will now use L2s instead of the Ethereum L1, let's talk about how we can make L2s better.

Ethereum will keep having L2s. One of the prominent arguments and trolls we saw in 2024 on twitter was that Ethereum has too many Layer 2 chains—in fact, we seem to find new announcements almost every week.

But we should understand that L2s provide an environment to introduce new business models in crypto applications other than being: just another blockchain on Ethereum. L2s at best, are purpose-built blockchains. And thanks to them, we now have:

• Consumer blockchains: i.e Base, Abstract, World Chain

• DeFi blockchains: i.e Unichain, Hyperliquid on Arbitrum one, Ink

• Shared sequencing layers: i.e Superchain, Agglayer, Elastic chain, Arbitrum orbit, Espresso

• Social/asset blockchains i.e Zora, ENS Namechain, Lens Network, Sonieum

• Liquidity/Institution chains: i.e Deutsche bank L2

• AltVMs: i.e  Fuel Network, Eclipse, Fluent (Blended VMs)

“The value proposition of Ethereum supporting L2s is that they allow flexible customization of the EVM and the Ethereum social layer for specific use cases”

It is teams getting the advantage to design and build for the vision they want to see in reality. It is slightly different from appchains.

Appchains - customize application for better experience.

L2 chains - customize the EVM for an ecosystem to build on top.

So we should expect more L2s in the future.

The diversity in the Ethereum Layer 2 ecosystem introduced competitions amongst teams and it is obvious the community is on the verge of a socio-political divide.

While most team definitely have mutual love and respect for Ethereum, it is now a pvp world 💀.

The amount of people that are onchain are so few and not all chains have the budget to go all out in onboarding new users while still maintaining the chain. So everyone has to fight for the same users, same liquidity providers and same operators.

However we can say every L2 currently faces two dilemmas in choosing their growth strategy.

L2s have to choose if they should prioritize interoperability or independence.

"When your liquidity providers are my liquidity providers, and your users are my users, shouldn’t we collaborate and make things comfortable for them so they can both serve us well?"

From a business perspective, most teams would disagree. But the bad user experience doing that clearly provides could make teams reconsider. A lot of teams are trying to support the ecosystem with a more standardized approach to addressing this.

People have come up with EIP7683 (cross-chain intents standard) and RIP7755 (Cross-L2 call standard) for cross-L2 messaging.

But we must make efforts so this doesn't introduce an oligopolistic system like the one we have in web2, all over again. Further efforts are expected to be made for a more standardized approach that benefits credible neutrality.

There are few areas blockchains can interoperate:

Proof Aggregation: by joining a synchronous shared bridge with blockchains of similar architectures to enable cross-L2 messaging within the cluster i.e Superchain, Elastic chain, Arbitrum orbit.

Liquidity: by either connecting with a shared sequencing layer or an independent solver network infrastructure.

Teams also need to differentiate and own the end to end pipelines of their consumer onboarding. So a team could decide to use interop systems and still maintain independence.

Areas blockchains can differentiate:

VM: L2s can customize their VM, their sequencing and their smart contract language. Some L2s still use the EVM, others have modified a few things and used a different language (e.g rust). L2s can make decisions that best communicate their visions and help them innovate.

Wallets: Each rollup can have its own wallet to differentiate and improve its ecosystem user experience and pay attention to their ecosystem users the most. This would help establish brand loyalty in a multichain world.

From what I have documented so far, there are few areas I believe Ethereum rollups should improve on and what I would like to see from an ideal Ethereum Layer 2 chain.

What do Hyperliquid, Binance, Coinbase, Kraken, OKX and even Metamask 😏 have in common?

These teams built an app-first solution before scaling into an ecosystem chain infrastructure. And look at their success!

Building app-first should be the ultimate go-to-market strategy for most teams working in crypto at this time.

For rollups, this means their wallets. Rollups should stop outsourcing their ecosystem user onboarding to wallet providers with horrible user experience. The current approach is like giving your baby away to some strangers to take care of them for you.

Instead, rollups should own the gateway to their user experience. Rollups should directly own every bit of their user journey until apps usage (Please don’t wait for apps).

Any rollup that fails to do this, risks a chance of having their lunch eaten by wallet providers and existing ecosystem gateways. Some of the teams who are known to have formerly own gateways have now built their own ecosystem chains: Binance Exchange & Wallet → BNBchain, Coinbase Exchange & Wallet → Base, Kraken Exchange → Ink, OKX Exchange & Wallet → OKT chain, Consensus & Metamask →  Linea.

Making a move to build wallets should feel natural at this point since every rollup builds its own block explorers, and other fundamental protocol architectures—rollups should own. Other L2s I admire doing this are: Abstract with Abstract Global Wallet, Ithaca by paradigm with Porto.

I want to see more of this!

Ecosystem projects should be supported. When an app wins, the ecosystem wins. It is really important for L2s to be overly obsessed with their builders and user onboarding.

Teams should forget the twitter wars and be overly obsessed with onboarding users and supporting your builders, it's the biggest thing a team can ever do after the wallet gateways have been provided.

When builders get the perfect experience for their apps, it'll be easy to onboard users seamlessly.

No, not literally lol. But after you have successfully provided an amazing user experience, and have won the best onboarding experience, you can now market users to developers. At this point, nobody cares about accessing other ecosystems through your apps, you can build and scale all you want!

This is all I want to see from rollups in 2025. We have been entertained all year in 2024 with the PVP hot takes, silly tweets and useless podcasts that have not brought any real change.

It is time for the bickering to come to an end. Any rollup who fails to explore this will be floored mercilessly. Many chains would shut down when there's no more revenue and liquidity providers are tired of their horrible UX with no incentives.

2025 is a year for the serious rollups to scale. All rollups should grow up!