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Galaxy’s Alex Thorn Calls Ethereum L2s ‘ETH Extractive’ Amid Fee Retention Concerns
In a recent social media post, Galaxy Digital’s head of research, Alex Thorn, expressed his reservations about the business model of many Ethereum layer-2 (L2) blockchains, terming them “ETH extractive.” This criticism stems from concerns regarding fee retention practices in these L2 networks.
According to Thorn, the majority of L2s retain a significant portion of their fees while contributing relatively little value back to the Ethereum mainnet. He argues that this approach creates an imbalance, favoring the financial well-being of the L2 operators rather than the Ethereum network itself. This assertion is supported by recent data suggesting that fee retention has become a contentious issue in the crypto community.
Thorn’s statement drew attention as it reignited debate over the role and responsibilities of Ethereum L2s. He emphasized that most L2 networks are controlled by single entities or foundations, which further exacerbates the financial disparity between the operators and ETH holders.
The analysis also touched upon the post-EIP-4844 fee models, which have significantly reduced data costs for L2 networks. This development has sparked a controversy around how to allocate these cost savings. Thorn’s argument highlights the need for a more balanced approach, considering the long-term sustainability of Ethereum as well as the financial incentives driving these operations.
Thorn’s statement serves as a reminder that the crypto industry still grapples with fundamental concerns over the value distribution within its ecosystem.
Source: cryptoslate.com
