TL;DR
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There’re 20+ L2 chains being built on ETH, and each project is somehow convinced they’re not in competition with the next (they are, and it’s ‘winner takes most’).
Full Story
Remember at the ending of Terminator 3, how you find out the human/cyborg war had already quietly begun earlier in the movie…
But it took the humans the better part of the 1hr 49min watch time to figure it all out?
The Ethereum layer-2 (L2) situation is reminiscent of that.
There are a BUNCH of L2 blockchains being built on top of Ethereum, and each project is (somehow) convinced they’re not in competition with the next.
Rather, they’re all doing it for the greater good of Ethereum (this is referred to as ‘Ethereum alignment’).
In reality, these L2 chains are at war with one another.
(Whether they realize/admit it, or not).
Bold words, we know! So let’s back them up. Starting with the ‘what’ of it all…
The Ethereum mainnet (aka the ‘layer-1’) is like a freight train (slow, expensive, but highly secure/reliable), while L2 chains are like passenger trains (fast, cheap, but a little less reliable/secure).
Both rely on the same set of rails (the Ethereum network) to operate, but serve different purposes.
…and as romantic as it might seem:
You’re not going to want to use a freight train (ETH) for personal transport (everyday transactions) cause it’s not designed for it! It’s just too damn slow/expensive.
(Think anywhere between $3-$3k in fees per transaction, depending on demand).
Ok, so why the ‘war’?
Well, right now, there’re something like 20+ layer-2 chains competing for your money/attention/patronage.
Can you imagine a train system where there were 20 different passenger train companies competing for customers?
Picture it…hold that image in your mind…ok, got it? Good.
Now, let’s make things even more complex:
Imagine that the platform you were boarding from determined the train company you would use — and that that company had its own currency/ticketing system that didn’t play nice with any of the other companies.
Which meant if you needed to change trains at some point, it’s going to result in transfer fees and a long wait time.
Ok, ok, this analogy is getting way too heady.
But that’s kinda the point — the Ethereum L2 ecosystem is a mess right now, just like this fictional train system!
The same way Amtrak owns the majority of the interstate passenger rail market in the US, we believe we’ll inevitably see a dominant L2 take over on Ethereum.
It won’t be winner takes all, but instead: winner takes most.
Wanna know why?
Click here to read Part 2…
