Ethereum L2 development is ‘double-edged sword’ for ETH value

Ethereum’s commitment to L2 scalability may be a “double-edged sword” for the ETH price, potentially leading to liquidity dispersion among blockchains.

Ethereum’s push toward layer-2 (L2) blockchain scalability may be a double-edged sword for Ether, potentially weakening the value accrual of the world’s second-largest cryptocurrency, according to a new report from Binance Research.

The report suggests that Ethereum’s L2 blockchain networks — built to improve mainnet scalability and lower transaction costs — may be cannibalistic of the Ethereum base layer, negatively impacting the price of Ether (ETH).

Ethereum’s dominance in terms of decentralized exchange (DEX) volume and fees generated is “under threat” by Solana and BNB Smart Chain, Binance Research wrote.

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