TechFlow reports, Nothing Research partner 0xTodd has published an analysis of the profitability model within the Layer 2 (L2) ecosystem and predicted future trends for L2 development. He stated:
- L2 revenue comes from gas fees paid by users;
- Expenses are the gas fees L2s pay to the Ethereum mainnet;
- At its core, L2 is a fee-charging business.
Ethereum's EIP-4844 upgrade introduced during the Cancun upgrade significantly reduces L2's on-chain gas expenses, thereby substantially increasing L2 profit margins.
The majority of L2s do not use their own native tokens as gas—primarily because ETH is more popular among users and using ETH as gas is considered more orthodox, but also because it allows them to earn ETH directly.
0xTodd predicts the following trends in L2 development:
1. Increase revenue (activity): For example, continuously luring users with the promise of airdrops, or subtly encouraging meme coin trading, free mint NFTs, etc.
2. Increase revenue (price per transaction): Exploring opportunities in MEV (Maximal Extractable Value).
3. Reduce expenses (internally): Embracing the Cancun upgrade; adopting cheaper data availability (DA) layers.
4. Reduce expenses (collaboratively): "Carpooling" with other L2s—sharing L2 gateways, shared sequencers, etc., to reduce gas costs.
