Ethereum Foundation Publishes Article: Restructuring the Division of Labor Between L1 and L2 to Co-build Ethereum's Ultimate Ecosystem

Five years of development, the Ethereum Foundation updates its top-level guidance and positioning for L1 and L2 ecosystems.

Written by: Josh Rudolf, Julian Ma, and Josh Stark

Translated by: Chopper, Foresight News

The ultimate goal of the Ethereum Foundation Platform team is to promote Ethereum as a unified, collaborative system that achieves scalable expansion, allowing all users to use it with confidence. This article aims to share our views on the relationship between L1 and L2, explain the roles of each layer, and how we (as an ecosystem) can leverage the advantages of L1 and L2 to create the most attractive platform for all users. Some of these insights are already clear, while others require ongoing experimentation and iteration with the community and users to validate.

TL;DR

Goal: All individuals and institutional users should have clear pathways to utilize, expand, and benefit from Ethereum’s core attributes. The best way to achieve this is to fully utilize each layer’s unique features, strengthen Ethereum’s core properties, and deliver meaningful value to end users through these attributes.

As Ethereum’s ecosystem develops, the roles of each layer are also evolving:

• In the past: L2’s primary mission was to help scale Ethereum, with differentiation and customization as secondary goals. Scalability was the key focus.
• Today: L2’s main mission is to provide differentiated features, services, customization options, marketing strategies, and control areas while achieving scalability. Currently, the main drivers are differentiation, control, and innovation.
• L1 serves as a truly permissionless, highly resilient global settlement layer, sharing state, providing liquidity, and acting as the DeFi hub. A robust, scalable L1 that does not compromise on CROPS (Censorship Resistance, Open Source, Privacy, Security) provides a better foundation for L2.
• L2 offers valuable new features, customization, and control to develop its own on-chain economy, while extending Ethereum’s core attributes to more users. A strong L2 network reinforces the Ethereum ecosystem and its central focus.

L2 covers all aspects, establishing differentiated relationships with L1 based on specific needs:

• L2s seeking tight integration with L1 should strive for composability, full interoperability, shared liquidity, and native Rollup mechanisms.
• L2s with various business models or technical expertise will continue to play important roles in the ecosystem, offering capabilities that L1 cannot provide.

The Ethereum Foundation (EF) will continue to develop underlying technologies to seamlessly extend L1’s native features to L2, ensuring cross-layer and cross-chain liquidity and asset interoperability are secure and transparent. Both sides play vital roles, and their words and actions must align.

Introduction

Over the past five years, a vast L2 ecosystem has emerged around Ethereum L1. Various L2s inherit different native properties of Ethereum: some fully replicate decentralized architecture (e.g., Stage 2 Rollups), some inherit partial security features (e.g., Validium, Privium), and some only support general EVM compatibility (not true L2s). Many chains are still under development, often starting as independent chains and gradually integrating deeply into the Ethereum L1 ecosystem.

It is now time for the Ethereum Foundation (EF) and the broader Ethereum community to update our understanding of the relationship between L1 and L2 networks. The last update was about five years ago, when a roadmap centered on Rollups was first proposed as a way to scale Ethereum.

Since then, the landscape has changed significantly. Technologies enabling L2s to share Ethereum’s security and liquidity and to interoperate have matured; L2 differentiation and user value are increasingly prominent; L2s have grown into independent communities and ecosystems; and the L1 scaling roadmap has evolved to become clearer. The Ethereum ecosystem must recognize these changes and learn from past successes and failures.

In recent months, the future development direction of the relationship between Ethereum L1 and L2 has become clearer:

• A thriving Ethereum ecosystem must be built on a strong L1 foundation.
• Ethereum’s L1 will achieve order-of-magnitude expansion while maintaining the highest levels of security and decentralization, continuing as the core of on-chain economy and DeFi.
• An ecosystem composed of independent, interoperable L2 chains will emerge, offering higher customization, control, and functionality than L1 can provide. These L2 chains choose to root in the Ethereum ecosystem because it is the best choice for their users, communities, or enterprises.
• L2 chains will compete and cooperate to provide a variety of specialized block space, services, and assets.

This article aims to explain in more detail the vision of L1 and L2 coexistence and to outline pathways for establishing mutually beneficial relationships between Ethereum’s L1 and any chains that want to root and become part of the ecosystem.

What roles do L1 and L2 play, and how do they work together?

Ethereum L1 is the world’s leading programmable blockchain, unmatched in user adoption, developer ecosystem, decentralization, resilience, and foundational stability. It is the core of the DeFi ecosystem, aggregating the deepest liquidity across the network.

Ethereum L1 now has a clear scaling path while maintaining decentralization and security. Thanks to the joint efforts of many teams within the Ethereum ecosystem, zero-knowledge proof (ZK) technology has advanced far beyond expectations. In the coming years, we will be able to significantly increase Ethereum L1’s capacity while upholding its core values.

At the same time, no single public chain can support the diverse on-chain economic needs of the global community. Even if Ethereum remains dominant and its capacity increases by 1,000 times, many different chains will still exist because they offer specialized and customized services that L1 cannot:

• Specialized for specific applications or use cases
• Non-EVM functionalities
• Additional privacy guarantees
• Pricing mechanisms or transaction logic
• Ultra-low latency or other ordering features
• Extreme scalability that L1 cannot match
• Specialized economies, market entry strategies, and growth models
• Modular designs to meet compliance or other business requirements
• Other innovations or improvements that can iterate and deliver faster than L1

This creates opportunities for mutually beneficial relationships between L1 and L2, allowing both to focus on their respective complementary roles.

Why would independent chains be willing to become Ethereum’s L2?

• Cost efficiency. Compared to independent base-layer chains, L2s can replicate Ethereum’s top-tier security and decentralization at a very low cost. Building global decentralized validation nodes is expensive, time-consuming, and difficult. L2s can transfer this responsibility to Ethereum L1, paying as needed without bearing high fixed setup costs.
• Users and developers. Interoperating with the largest L1 and L2 clusters enables access to more users and developers. With advancements in zero-knowledge proofs, real-time proofs, faster finality on L1, L2 settlement, and mature proxy infrastructure, interoperability and cross-chain user experience will accelerate.
• Interoperability. If designed properly, L2s can securely access L1 assets, DeFi liquidity, user accounts, and services such as oracles and ENS on L1.
• Market promotion. As part of the Ethereum ecosystem, L2s can benefit from the brand reputation and credibility of Ethereum, which has the best reputation, security record, and regulatory recognition among all L1s.

What does Ethereum L1 stand to gain? Based on our experience and discussions with stakeholders across the ecosystem, positioning Ethereum L1 at the core of the growing L2 network can strengthen Ethereum and ETH’s unique position in the on-chain economy:

• Creating demand for ETH and providing trust-minimized, secure bridging services between ETH and other assets. ETH functions as a store of value and currency within the Ethereum network.
• Expanding Ethereum’s network effects (e.g., EVM, developer education, developer tools, user onboarding, and interoperability between L2s)
• Reinforcing Ethereum’s role as the core of a multi-chain ecosystem and the primary settlement and liquidity layer for on-chain economies
• Supporting broader business development, growth, and marketing efforts for Ethereum
• L2s help realize Ethereum’s core vision. They act as distributed engines of Ethereum’s core attributes (security, resilience, stability), maximizing the number of users who can derive sustainable value from Ethereum.

The Ethereum ecosystem should not take these advantages for granted. Some are still subject to debate within the community or require long-term validation through experimentation, measurement, and analysis. Ultimately, the relationship between L1 and L2 must be mutually beneficial to succeed. Over the past five years, this relationship has achieved many milestones and laid a crucial foundation for the future.

What does this mean for the future development of L2?

What does this new vision mean for L2 users, their teams, and communities?

Our recommendations:

• L2s should focus on strategies that complement L1 and enable platform differentiation. Many L2s have successfully moved toward this vision by innovating features, targeting specific use cases (e.g., application chains), offering new distribution methods, or adopting novel marketing strategies. This helps them build unique communities and extend Ethereum’s features to millions of new users.
• L2s should have the freedom to differentiate in various ways according to their own visions. We already see differentiation in scalability, trustlessness, privacy, enterprise compliance, industry focus, community, and a range of technological innovations.
• L2s can choose to extend all or part of Ethereum’s attributes based on their goals. They should ensure users can easily understand what security properties they offer and do not offer. Trust-minimized L2s should at least reach Stage 1 and pass “exit” tests, meaning users can safely exit to L1 even if malicious actors or security committees fail. L2s that aim to be closest to L1 and fully inherit its properties should develop toward: 1) Stage 2; 2) synchronized composability; 3) native Rollup.
• L2s should continue building broader interoperability and shared liquidity mechanisms to strengthen the entire Ethereum ecosystem.
• L2s should operate transparently, clearly communicating their security properties and their relationship with L1’s security layer.

What is the Ethereum Foundation contributing to build this world?

To realize the L1<>L2 relationship vision, the Ethereum Foundation is actively advancing:

• Efforts to expand L1 and blob layers without sacrificing decentralization. Currently, blob utilization is only about 30%, leaving significant room for expansion. We are fully capable of further scaling blob if needed.
• Special support for L2s with privacy, security, and trustless features or those seeking to deepen these aspects.
• Led by Josh Rudolf, the Platform team aims to improve overall Ethereum platform performance and serve as an interface between L2 and the core protocol roadmap.
• Increasing L1 liquidity to make it easier for L2s to access liquidity (faster finality, withdrawals, deposits).
• Working closely with L2 teams to understand their needs, prioritize protocol development, and clarify the relationship between L1 and L2. To ensure this relationship functions effectively, we need to identify what works well, what needs improvement, and collaborate to strengthen the value proposition of being part of the Ethereum ecosystem.
• Investing in R&D for “Native Rollup” technology, enabling L1 to fully and trustlessly verify L2 chains, achieving synchronized composability and secure interoperability.
• Collaborating with L2Beat and other organizations to monitor and verify L2 security features. We must rigorously and honestly evaluate L2 properties and their relation to L1 security so users and developers can make informed choices.
• Addressing the main fragmentation issue in multi-chain ecosystems: user and developer experience. We will work with the ecosystem—including various chains, wallets, and infrastructure providers—to build better interoperability solutions, tackling fragmentation in user experience and developer platforms. With a clearer understanding of the L1-L2 relationship, we can begin to address the narrative fragmentation within Ethereum.

Together, we aim to build a global, permissionless on-chain economy that offers the best platform for all users.