Ethereum Layer-2 is very successful, which native tokens are you investing in?

[KryptoBull]

Ethereum used to have issues with slow speeds and high gas fees, but these seem to have been addressed by Layer-2 solutions. In recent months, the Ethereum layer-2 ecosystem has witnessed explosive growth. According to a recent report by Cointelegraph, the number of daily transactions on layer-2 networks has surged by 140% since the beginning of 2024 ^[1].

The rise of Layer 2 solutions is having a profound impact on the Ethereum network. One of the most notable effects is a significant reduction in gas fees. This makes it easier for users to interact with the Ethereum network, thereby promoting the adoption of Ethereum in various sectors of the crypto market and in real-world applications. Accompanying this is a decrease in the number of transactions on Ethereum, a decrease in the amount of ETH burned from transaction fees, and a return of ETH inflation. However, I don't think this is really important for an investor's decision to buy and hold ETH ^[2].

The success of Layer-2 has shifted my focus towards their native tokens like MATIC, ARB, OP, BLAST, LRC, DYDX, IMX, MNT, etc. Although the prices of these native tokens are not particularly high right now, I still maintain the view that the Layer-2 trend will explode in this uptrend, and the tokens within their ecosystems will yield significant profits for investors.

I would like to know your opinion on this issue:

• Do you think the success of Layer-2 is also the success of Ethereum?
• Are you holding any native tokens of Layer-2?
• Are you planning to invest in tokens in the Layer-2 ecosystem this season?

References:
[1] Ethereum L2 ecosystem processes a record 12.4M transactions in a day
[2] Ethereum Inflation Surges with Burn Rate Decline: Layer-2s Vital in Dynamics – ETH Price May Bottom
Note:

• My opinion has been presented in a topic, on BitcoinTalk forum.
• This topic on AltcoinsTalks forum has included a minor change in the way my opinion is presented.
• This statement is to avoid accusations of plagiarism.

[hugeblack]

Your analysis is generally correct but the million dollar question, do you think the need for Layer-2 guarantees that it will be a certain one that will rise especially with the presence of many projects such as MATIC, ARB, OP, BLAST, LRC, DYDX, IMX, MNT, etc.


Let's assume that investments will flow into Layer-2, it is still a group of tokens that may not all rise and investing in them may not be profitable on average. I can bet on which of these tokens will succeed and then I can consider it a good source to provide more liquidity to buy Bitcoin or Ethereum.

[pakhitheboss]

Before writing such detailed analysis about the layer 2 solution you should have checked the following thread: https://www.altcoinstalks.com/index.php?topic=322326.0

Layer 2 solutions on Ethereum network have started facing network congestion that is why layer 3 solutions projects have now started coming up. I don't think in the coming years existing layer 2 projects will be able to handle the traffic. I am not interested in anyone of them currently.

[Zaguru12]

Layer 2 solutions on Ethereum network have started facing network congestion that is why layer 3 solutions projects have now started coming up. I don't think in the coming years existing layer 2 projects will be able to handle the traffic. I am not interested in anyone of them currently.

I don’t think any of this Ethereum layer 2 networks have lived up to their hype, my biggest disappointment was on the Polygon network (Matic), it’s hype was supposed to take it way up than we have now but it’s scalability is still a big concern as it’s faces congested sometimes too. Interms of investing I will definitely not recommend Any as of now, if there is any on Ethereum it will be the base network. ZKsync had a very bad congestion and also its airdrop wasn’t pleasant so I don’t see many investors coming towards it right now. Moreover with Solana blockchain going high in terms of scalability I think Ethereum and it’s layer 2 network are going to face a very difficult competition

[pakhitheboss]

Moreover with Solana blockchain going high in terms of scalability I think Ethereum and it’s layer 2 network are going to face a very difficult competition

I have not heard pleasent news about Solana after the network got hyped by meme coins. Network outrage has been a constant issue with it. The only benefit I can think of is less transaction fee when I compare it with Ethereum. The problem is that all known blockchains are having congestion issue even TON is facing the same issue. There is no end to congestion sometimes I feel.

[Hamza2424]

Initially, I was super interested in MAtic and still, i'm but not as a Layer 2 project, now for the L2 in my view OP and ARB have great potential to shine in this cycle, and for sure L2's are gonna explode as one of most dominant narrative in this cycle.

Yup in my views as L2's are under the ETH ecosystem and the more developed L2's ecosystems will directly gonna boost the ETH's ecosystem, and the only reason why i consider ETH as one of most reliable coin after Bitcoin is due to its immense ecosystem.

[bitterguy28]

The problem is that all known blockchains are having congestion issue even TON is facing the same issue. There is no end to congestion sometimes I feel.

something positive is now associated with something negative as investors we would be happy to see the value of a coin going up which means more and more people are investing in and using that coin unfortunately this rises the chances of congestion which for people who want to use the coin for daily transactions this becomes a huge problem

crypto in itself is a great innovation but we need to accept that it still has a long way to go it still cannot keep privacy security and decentralization without sacrificing contrpl of congestion and vice versa

i am hopeful that someday we can see another blockchain that has perfected everything so that we can get rid of all these problems

[libert19]

Do you think the success of Layer-2 is also the success of Ethereum?

Yes, since layer 2s like Optimism, Arbitrum have arrived — we are seeing low gas fees on mainnet. Of course bear market also played it's part in having this low fees, but these layer 2s are processing good number of transactions, so taking load up from mainnet anyhow.

Are you holding any native tokens of Layer-2?

Yes, $OP, $ARB and $ZK.

Are you planning to invest in tokens in the Layer-2 ecosystem this season?

Yes, already mentioned above, I'd love to invest more but money?

You buy at dips, and it keeps dipping then on significant dip you don't have money to take advantage of dip lol.

[KryptoBull]

Your analysis is generally correct but the million dollar question, do you think the need for Layer-2 guarantees that it will be a certain one that will rise especially with the presence of many projects such as MATIC, ARB, OP, BLAST, LRC, DYDX, IMX, MNT, etc.

Let's assume that investments will flow into Layer-2, it is still a group of tokens that may not all rise and investing in them may not be profitable on average. I can bet on which of these tokens will succeed and then I can consider it a good source to provide more liquidity to buy Bitcoin or Ethereum.

I can't predict the future, I can only judge based on MATIC's success in 2021 and the current popularity of L2. I really hope that trading and investment demand will be strong enough to drive the development and popularization of L2, causing their native tokens to increase in value significantly.

However, investing in the crypto market always comes with risks, especially when investors choose altcoins with small caps. If fear and account management cannot be controlled, investors should still be satisfied with BTC and ETH. Personally, I'm more optimistic. I think this is a good time to consider L2 native tokens as they have just returned to their bottom prices.

[hugeblack]

Your analysis is generally correct but the million dollar question, do you think the need for Layer-2 guarantees that it will be a certain one that will rise especially with the presence of many projects such as MATIC, ARB, OP, BLAST, LRC, DYDX, IMX, MNT, etc.

Let's assume that investments will flow into Layer-2, it is still a group of tokens that may not all rise and investing in them may not be profitable on average. I can bet on which of these tokens will succeed and then I can consider it a good source to provide more liquidity to buy Bitcoin or Ethereum.

I can't predict the future, I can only judge based on MATIC's success in 2021 and the current popularity of L2. I really hope that trading and investment demand will be strong enough to drive the development and popularization of L2, causing their native tokens to increase in value significantly.

True, but betting that L2 will rise is a valid bet. You just have to be smart about which ETH L2 pairs will attract investors’ attention because this is the one whose price will be pumped and all L2 tokens will follow it.
I was also an investor in MATIC but I started losing hope.

[rdluffy]

The big problem with these governance tokens is the almost certain devaluation, since VCs have a large number of tokens and usually sell at the first opportunity they get to recover the money invested

I use Arbitrum, Polygon, Base, Zksync and Optmism
Excluding Polygon, which I already use to store my ETH (weth), the most I use it for is to hunt for some aidrops, and these networks are cheaper to make bridges and put in some DeFi apps
I'm currently only holding the ZKSync token because I sold one part and kept another

[MrSpasybo]

I would like to know your opinion on this issue:

• Do you think the success of Layer-2 is also the success of Ethereum?
• Are you holding any native tokens of Layer-2?
• Are you planning to invest in tokens in the Layer-2 ecosystem this season?

1. The emergence of Layer-2 has helped Ethereum alleviate its transaction burden, allowing it to be used for other important purposes such as asset tokenization or transaction validation for Layer-2. Users will benefit more from this upgrade, making Layer-2 a significant development for Ethereum.

2. I have ARB, IMX, and DYDX in my portfolio, which are all tokens belonging to the Ethereum Layer-2 segment with different purposes, although IMX and DYDX are not as well-known as ARB.

3. I prefer native tokens, so I'll probably just invest in them instead of researching more about projects inside such as DEXs and staking projects.

[KryptoBull]

1. The emergence of Layer-2 has helped Ethereum alleviate its transaction burden, allowing it to be used for other important purposes such as asset tokenization or transaction validation for Layer-2. Users will benefit more from this upgrade, making Layer-2 a significant development for Ethereum.

2. I have ARB, IMX, and DYDX in my portfolio, which are all tokens belonging to the Ethereum Layer-2 segment with different purposes, although IMX and DYDX are not as well-known as ARB.

3. I prefer native tokens, so I'll probably just invest in them instead of researching more about projects inside such as DEXs and staking projects.

I also think we should have a more open-minded view of L2, even though the Optimistic & zK Rollups technology aren't perfect yet. ETH's inflation is a minor issue, not worth worrying about or hindering Ether's development. In fact, ETH investors don't even need to know the inflation or deflation rate.

With the support of L2, Ether will be freed up and used for greater purposes, more money will flow into Ether, and ETH price will definitely increase, not just depending on the supply/demand from the amount of ETH burned in transaction fees. Ether is also used to confirm transactions for L2, which means when L2 has more customers, Ether will also have more transactions to confirm and burn fees.

[LogitechMouse]

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I would like to know your opinion on this issue:

• Do you think the success of Layer-2 is also the success of Ethereum?
• Are you holding any native tokens of Layer-2?
• Are you planning to invest in tokens in the Layer-2 ecosystem this season?

1. Without Ethereum, there will be no Layer-2 projects that will be developed. I mean it's the origin so it has a big contribution towards how Layer-2 projects are right now. These Layer-2 projects are under Ethereum so whenever investors think about these projects, they will also think about Ethereum so I think it is.

2.Arbitrum, and Polygon are the ones that I'm currently holding right now although it isn't that much.

3. Right now, no because I've already set all of my money into Bitcoin and Bitcoin only until the bull run starts. I know that the upside of these altcoins are much higher than that of Bitcoin, but I just want to lessen my risk hence, I will be focusing on Bitcoin. I will only buy these altcoins particularly these Layer 2 projects during the bear market.

[KryptoBull]

1. Without Ethereum, there will be no Layer-2 projects that will be developed. I mean it's the origin so it has a big contribution towards how Layer-2 projects are right now. These Layer-2 projects are under Ethereum so whenever investors think about these projects, they will also think about Ethereum so I think it is.

2.Arbitrum, and Polygon are the ones that I'm currently holding right now although it isn't that much.

3. Right now, no because I've already set all of my money into Bitcoin and Bitcoin only until the bull run starts. I know that the upside of these altcoins are much higher than that of Bitcoin, but I just want to lessen my risk hence, I will be focusing on Bitcoin. I will only buy these altcoins particularly these Layer 2 projects during the bear market.

I also hope that Ethereum will always be the focal point for all investors when participating in these L2s, meaning that the price of ETH will always be referenced and ETH will also be included in their investment portfolios. This could be a significant driver for ETH to increase in price along with the L2 native tokens instead of being forgotten.

I am also buying L2 native tokens because I think this is the right time to accumulate them to make a profit in an uptrend. In a downtrend, I just want to hold stablecoins and only buy BTC in the market's accumulation and recovery periods . Other altcoins have too much risk and often recover less than BTC during those periods.