Frictionless flows are Ethereum's path to economic dominance

Frictionless capital movement between Ethereum's layer-2 rollups is the key to its economic dominance. Tariffing rollups could fragment the ecosystem.

Opinion by: Barna Kiss, CEO of Malda

An idea recently floated by some prominent thinkers in the Ethereum space to reclaim value for the mainnet is the taxing of its Layer-2s. The future of Ethereum does not depend on policy but on enabling frictionless capital movement between the L2s in question. Tariffing rollups may appear a neat way to reclaim value for the mainnet. In practice, it would fragment the ecosystem, drain liquidity, push users toward centralized platforms, and avoid decentralized finance altogether. In a permissionless system, capital flows to where it is treated best, and Ethereum's rollups mistreat it.

In traditional finance, the link between fluidity and growth is well established. Lower barriers to capital inflows lead to higher investment. Take the European Union's pre-Brexit single market. Investment flows slowed when the United Kingdom's exit fragmented access to capital pools, as economists tracking cross-border activity noted. Ethereum faces a decentralized parallel. 

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