The great fee migration already happened. Nobody's pricing it.
Five years ago, execution lived on Ethereum. Today, most transactions in the Ethereum economy happen on Layer 2s — and the fees followed. L1 fees used to be the metric everyone watched. Now the marginal transaction pays cents on an L2 instead of dollars on the L1, and the economic gravity has quietly moved down the stack.
Here is the unresolved question: who captures the value?
L2s earn sequencer revenue — a real business with real margins, especially after blob space slashed their data costs. But sequencer margins are also a commodity business waiting to happen. Competition among L2s compresses fees toward cost, like every utility market before it.
The L1, meanwhile, collects settlement trust. It is paid in security demand, not transaction volume. That is a different and arguably more durable business model: rent on trust rather than rent on throughput.
Honest framework: L2s = execution margin. L1 = settlement rent. One is a competitive utility. The other is closer to a monopoly on finality.
What I watch: where the marginal transaction actually happens (not where the narrative says it should), how fast L2 fees compress, and whether L2 tokens ever capture sequencer profits instead of subsidizing growth with them.
The fee migration was inevitable. The value capture is still undecided.
$ETH $BTC $SOL
#Layer2 #Ethereum #MarketStructure #CryptoInsights #DeFi
Five years ago, execution lived on Ethereum. Today, most transactions in the Ethereum economy happen on Layer 2s — and the fees followed. L1 fees used to be the metric everyone watched. Now the marginal transaction pays cents on an L2 instead of dollars on the L1, and the economic gravity has quietly moved down the stack.
Here is the unresolved question: who captures the value?
L2s earn sequencer revenue — a real business with real margins, especially after blob space slashed their data costs. But sequencer margins are also a commodity business waiting to happen. Competition among L2s compresses fees toward cost, like every utility market before it.
The L1, meanwhile, collects settlement trust. It is paid in security demand, not transaction volume. That is a different and arguably more durable business model: rent on trust rather than rent on throughput.
Honest framework: L2s = execution margin. L1 = settlement rent. One is a competitive utility. The other is closer to a monopoly on finality.
What I watch: where the marginal transaction actually happens (not where the narrative says it should), how fast L2 fees compress, and whether L2 tokens ever capture sequencer profits instead of subsidizing growth with them.
The fee migration was inevitable. The value capture is still undecided.
$ETH $BTC $SOL
#Layer2 #Ethereum #MarketStructure #CryptoInsights #DeFi