L2 Rakes in Profits While Ethereum Becomes a 'Cheap Landlord'

Author: Nancy, PANews

With daily settlement costs as low as a few hundred dollars or even less, Layer 2 (L2) can leverage Ethereum's secure "brand" while retaining most of the economic value for itself. L2 is gradually becoming a highly profitable passive income business, reigniting discussions in the market about Ethereum's value capture model.

L2 Profits Skyrocket While Ethereum Only Gets a "Pittance"

As Ethereum increasingly becomes the secure foundation for a growing number of on-chain economic activities, L2 is taking on a large volume of users, liquidity, and transactions at a very low cost. Despite fierce competition in the Ethereum L2 space, many projects ultimately fail to survive. However, for the leading L2 projects that do succeed, ongoing on-chain activity is translating into substantial revenue, making them veritable "money printers."

According to Growthepie, since the beginning of this month, the revenue on the Ethereum ecosystem chain has reached $52.19 million, with the top four being Robinhood Chain, Ethereum mainnet, Base, and Polygon, generating approximately $39.06 million, $7.32 million, $3.62 million, and $1.44 million respectively, accounting for a total of 98.5% of the ecosystem's total revenue. Notably, Robinhood Chain's revenue has increased by 1266% month-over-month, leading all chains and contributing the vast majority of revenue to the entire Ethereum ecosystem.

In the past week, there have been very few chains that reached revenue levels in the hundreds of thousands of dollars, with only Robinhood Chain, Ethereum mainnet, Base, Polygon, and Arbitrum, together accounting for 97.6% of total revenue.

Whether viewed on a monthly or weekly basis, the liquidity and revenue capture in the Ethereum ecosystem are highly concentrated among a few leading chains, while many L2 projects are gradually being marginalized. Meanwhile, the siphoning effect of traffic from the leading chains is becoming increasingly evident; the more active the transactions and the more frequent user participation, the more effectively they can convert on-chain traffic into actual revenue, further widening the gap with other L2s.

However, the problem is that while L2 is making more money, Ethereum is not receiving corresponding dividends.

Data from Growthepie shows that in the past 30 days, the top three chains paying the most L1 fees to the Ethereum mainnet are Robinhood Chain, Base, and World Chain, with corresponding amounts of only about $18,000, $10,000, and $3,700. Compared to the millions or even tens of millions of dollars in revenue generated by leading L2s, the revenue share received by Ethereum is negligible.

Take Robinhood Chain as an example. As one of the most active L2s in recent economic activities and the highest in revenue, Robinhood Chain is also the L2 that pays the most L1 fees to the Ethereum mainnet. Yet, even so, its "rent" paid to Ethereum is almost negligible compared to its own revenue. For instance, on September 4, Robinhood Chain's daily revenue reached $8.36 million, while the fees paid to Ethereum during the same period were only about $722.

In fact, with the launch of Blob, the settlement costs paid by L2 to Ethereum have further decreased, enhancing L2's profit margins. In the past 30 days, Robinhood Chain's profit accounted for a staggering 100% of its revenue, while Base reached 99.8%, and Arbitrum also hit 99.6%.

This means that for leading L2s, the security and settlement services provided by Ethereum are becoming a very low-cost infrastructure. L2s only need to pay minimal settlement fees to leverage Ethereum's security for large-scale on-chain economic activities while retaining the vast majority of their revenue.

L2 Enjoys Security Dividends at Low Prices: How Can Ethereum Improve Value Capture?

L2 is capturing an increasing amount of economic value, while Ethereum, as the underlying settlement layer, is receiving relatively limited revenue, prompting further discussions in the market about its value capture model.

Some have even suggested that if L2 only needs to pay a small amount of "rent" to Ethereum to gain its security, finality, and composability, then there is no need for public chain projects to build a sovereign independent L1; directly adopting an L2 architecture is a more cost-effective choice.

Notable DeFi researcher Ignas has raised similar questions. He pointed out that this business structure, where "platforms make a lot of money while the settlement layer gets almost nothing," is indeed a problem for Ethereum. Ethereum might currently be using low rents to draw TradFi into its ecosystem, planning to raise fees once user migration costs are sufficiently high. If the official roadmap truly includes a strategy of "first attracting a lot of L2s, then monetizing to L1 when switching costs rise," this could be beneficial for ETH. However, this approach is not visible in Ethereum's current roadmap.

Crypto KOL 0xTodd has also compared the security guarantees obtained by L2 from the perspective of security budgets. He noted that the Ethereum network currently adds about 1,700 ETH daily, which, at the current price, equates to approximately $3,050 worth of new ETH every minute. This issuance can be understood as a "security budget" that the Ethereum ecosystem bears to obtain underlying security. In contrast, L2s like Robinhood Chain reportedly pay fees to Ethereum that are only equivalent to about 1.8 minutes of ETH issuance costs, yet they can leverage Ethereum's vast validator network for underlying security.

Lorenzo Valente, Director of Digital Asset Research at ARK Invest, has drawn parallels between Ethereum, Solana, and Hyperliquid from a business model perspective, likening them to McDonald's, Chipotle, and In-N-Out respectively. In his framework, Ethereum is closer to McDonald's "franchise + landlord" model, achieving low capital investment ecosystem expansion through Rollup routes while providing underlying security and settlement services to numerous L2s. However, the issue is that after the launch of EIP-4844, the price of Blob space has significantly decreased, and L1 has captured almost no value from L2 activities.

Nevertheless, this does not mean that the expansion of L2 itself holds no value for Ethereum.

Crypto researcher Blue Fox pointed out that after the Dencun upgrade, the expansion speed of Blob capacity has exceeded the actual demand from L2, leading to a continuous decline in data availability (DA) prices. Consequently, the business model of L2 has gradually evolved into "block space revenue minus low DA costs," with most profits generated at the execution layer ultimately retained by L2 itself. In contrast, some L2 tech stacks have begun adopting revenue-sharing models linked to income, such as OP Superchain and the Arbitrum ecosystem, while Ethereum L1 still primarily charges fees based on data bytes and Batch dimensions. From this perspective, the overall expansion of L2 is beneficial for Ethereum to become the world's settlement layer, but this does not mean that Ethereum should provide security premiums at extremely low costs for the long term.

In his view, to improve Ethereum's current value capture ability, it is necessary not only to wait for Blob/DA demand to grow and push data space rents from negligible levels back to more meaningful ratios but also to explore pricing mechanisms at the protocol level that are more directly linked to the economic scale of L2. Potential solutions include requiring L2 to make mandatory contributions based on net protocol revenue, setting minimum settlement fees linked to proof frequency, or mandating that more high-value states remain on L1. Additionally, ETH's role in L2 may also be further strengthened. Beyond being the default Gas asset for networks like Base, OP, Arbitrum, and Robinhood, ETH also needs to become an irreplaceable collateral asset, fee payment asset, and forced exit asset, thereby further enhancing its economic value capture capability within the L2 ecosystem.

Ultimately, the question Ethereum currently faces is not whether to develop L2, but how to find a balance between expanding the settlement layer's scale and enhancing its own value capture. The more prosperous L2 becomes, the stronger the network effect of Ethereum as the underlying settlement layer; however, if the growth of L2's scale cannot be simultaneously converted into economic value for Ethereum, then how much actual value this prosperity can ultimately bring to ETH remains a question that needs to be answered.

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