With the total sector TVL surging 200% amid skyrocketing activity, 2024 was a monumental year for the Ethereum Layer-2 sector. With 2025 just around the corner, I sat down with Elena Sinelnikova, Co-Founder of Metis L2, to learn more about what’s ahead in the new year.
Q1: How Do You See The Layer 2 Sector To Perform In 2025?
The Layer 2 sector is all set for tremendous growth. Investment firm VanEck predicted the Ethereum layer-2 networks could achieve a valuation of over US$1 trillion by 2030. Among factors driving growth, the firm listed transaction pricing, developer and user experience, trust assumptions, and ecosystem size to emerge as crucial and pivotal.
I believe 2025 could very well become the inflection point for the layer-2 industry to take off for the grandest leap it has had so far. Platforms are increasingly keen to adopt layer 2 as they improve the levels of accessibility and scalability by a significant margin. Integration for global users becomes as seamless as it could get.
The layer-2 networks were designed to compete with the financial products like Visa and Mastercard in speed and cost of the financial transactions. Numbers show that transaction costs on Ethereum layer-2 networks have fallen by over 99% since the EIP-4844 was implemented. In absolute terms, fees drop from several dollars to a few cents on average. In the coming years, especially in 2025, this cost reduction will inspire diverse microtransactions and DeFi interactions, resulting in deeper adoption and user penetration.
Q2: Apart From Immediate Cost Benefits, What Do You Think Could Drive Adoption?
Some Layer 2 networks that implemented Decentralized Sequencing technology are now offering more than just low cost financial transactions to drive the adoption.
For instance, MetisL2 offers the opportunities for physical infrastructure providers to operate Decentralized Sequencer nodes and therefore earn the transaction revenue and mining rewards. This revenue and rewards are shared with the community at large through leading Liquid Staking protocols, which are paired with Sequencer nodes to distribute revenue to DApps and its users. This creates additional business models and drives the adoption on scale.
Besides the Sequencer rotation pool model creates the maximum performance and 100% uptime, which makes the MetisL2 attractive for high availability applications, such as gaming DApps, DeFi and social media networks.
A lot of Web2 gaming and social network applications are approaching us in hopes to offer additional incentives and Web3 opportunities for their user. We incubate them by helping with education, grants, and user incentives. Therefore we now have Web2 users ( users of Growfitter, Scoremilk, Arena of Faith and more) that transact on MetisL2 without even realizing they are using blockchain technology.
This is a real adoption!
Q3: Web3 Was Primarily Built On The Fundamental Principle Of Decentralization. How Do You Think Layer-2 Will Help Achieve The Most Optimized Decentralization Regimes In The Days To Come?
The decentralization of the Layer 2 networks is actually very limited at the moment.
By the design, Layer 2 is a centralized solution with the single-sequencer where sequencer operations and sequencer revenue are controlled by one single entity – Layer 2 team (usually a corporation).
Why is this bad?
First, Single Point of Failure. If this one Sequencer goes down, the entire Layer2 network goes down. Even some of the largest and most reputable L2s have experienced this misfortune (Example 1, Example 2, Example 3).
Second, this Single Sequencer makes it a very attractive target for hackers.
Third, under the single-sequencer model, one business entity (Layer2 corporation) hoards all profit from transactions, creating the potential for corruption.
We see this in the form of transaction censorship, and sandwich transactions which hurt the network users big time.
Unaware about the centralized nature of the Layer2 networks users are placing themselves at the mercy of a centralized corporate entity. This goes against the Web3 ethos.
That is specifically true for the single-sequencer Layer2 networks that haven’t reached at least Stage 1 in their development.
In order to become decentralized and safe for their users Layer2 network must (a) decentralize their sequencer operations and (b) reach at least Stage 1 in their development.
Sadly, there are hardly any Layer2 networks that achieved both (a) and (b).
Metis is pioneering the decentralization of the Sequencer since March 2024 and will reach Stage 1 in Q1 2025, becoming one of the first decentralized Layer2 networks.
I hope this sets the example for all other Layer2 networks to follow the decentralization path and become safe to use.
Q4: How Do You Think Interoperability Benefits Could Play a Role in Making Layer 2 Networks Grow?
Apart from decentralization, another winning bet for Layer 2 networks for 2025 and beyond could be its interoperability benefits.
Layer 2 developers have realized that the problem of fragmentation has to be addressed. According to L2 Beat, the industry had more than 70 active layer-2 projects, 20 layer-3 projects, 80 plus upcoming projects, and over ten already archived by the end of August this year.
Layer 2 developers have ably ensured that such numbers do not lead to fragmentation. Layer 2 chains have been developing interoperability solutions for quite some time now.
For instance, Metis Foundation incubated a project ZKM that has pioneered an interoperability solution called Entangled Rollup which allows to connect Layer 2 networks without any bridges.
Soon, it will become the case that having so many chains would start feeling like having a singular chain – a chain that is interconnected and seamless for its users. And with that achieved, I could hardly see any bottleneck for layer-2 networks to achieve their trillion-dollar mark!
