TechFlow news, on August 6, according to The Block, multiple analysts have pointed out that the surge in Ethereum Layer 2 solutions is raising concerns about liquidity fragmentation.
Patrick Liou, Head of Sales at Gemini, said that while the emergence of multiple Layer 2 blockchains aims to address scalability issues, it has inadvertently weakened the operation and adoption of blockchains and their applications. According to Gemini's report, a new Ethereum Layer 2 emerges every 19 days, further exacerbating the problem of liquidity dispersion. Liou emphasized that although moving liquidity from one blockchain to another remains challenging, advancements in bridging applications are making the process smoother.
A CoinShares research blog from March highlighted the same issue, noting that Ethereum Layer 2 solutions "unintentionally fragment liquidity and composability, degrading the overall application, developer, and user experience. Each Ethereum Layer 2 operates in a siloed manner, maintaining its own asynchronous asset ledger and handling and ordering transactions within blocks for smart contracts. This modular design leads to fragmented global state, negatively impacting liquidity."
