Has Layer-2 Fragmentation Lost Priority to Interoperability?
Ethereum’s future depends on layer-2 (L2) solutions. L2 blockchains have helped improve Ethereum network transaction fees, along with scaling capacities and security standards.
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L2 solutions have also advanced over time, resulting in an overwhelming number of new networks created. There are over 100 L2 blockchains listed on L2beat, with many more in the pipeline.
L2 Fragmentation Explained
While the increasing number of L2 blockchains is noteworthy, this has resulted in “fragmentation.” Fragmentation is a term used to describe L2 blockchains operating in isolation.
A recent Gemini institutional insights report found that a new Ethereum L2 appears every 19 days. This adds to concerns that liquidity, or the availability of assets to trade, is becoming fragmented.
Tyler Tarsi, co-founder of the developer ecosystem Omni Network, told Cryptonews that L2 fragmentation is a concern for both users and developers.
“If users have their money on one L2, they can’t use products on other L2s without a complex bridging process, which is typically for sophisticated users,” Tarsi said. “For developers, if they choose one L2, they miss out on all of the users and capital on other L2s.”
L2 Fragmentation Less Concerning This Year
Although this may be, some industry experts believe that L2 fragmentation has improved to the point where it may no longer be considered an issue.
Jon Kol, co-founder of interoperability framework Hyperlane, told Cryptonews that the tools to eliminate fragmentation are finally in place this year, and are being adopted at an accelerating rate.
For instance, Kol mentioned that any Ethereum Virtual Machine (EVM) compatible chain can be easily connected with others through service providers or open-source frameworks.
“A developer can spin up their own chain and connect it to over 100 others using Hyperlane with just a few hours of work,” he said. “Once those chains are connected, transferring both data and value between them becomes fairly straightforward, with cross-chain actions often taking less than 30 seconds.”
Kol shared that Hyperlane is already seeing dozens of decentralized applications (Dapps) move tokens cross-chain, or build cross-chain workflows using these frameworks.
For example, Velodrome – which has an array of liquidity pools across OP Stack chains – leverages Hyperlane to establish a cross-chain communication line between their OP chains.
“This system powers their token transfers and governance voting, and in Q1, they’ll enable cross-chain swaps through their pools using the same infrastructure,” Kol said.
Fragmentation Solutions Advance
Marc Boiron, CEO of Polygon Labs, told Cryptonews that while fragmentation is a very real problem, existing solutions have indeed advanced.
“The two existing solutions today are bridges and intent and solver networks,” Boiron said.
However, he pointed out that while bridges are necessary in the cross-chain future, they are not sufficient.
Similarly, while intent and solver networks create a very good user experience cross-chain, Boiron believes these do not create a good user experience alone.
In order to solve this, Boiron explained that a solution known as “The AggLayer” works with bridges and intent and solver networks to fix the security, cost and latency issues that arise.
Polygon Labs is behind AggLayer, which is essentially a protocol for unified interoperability.
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“AggLayer is a solution designed to connect all chains – whether L1s, L2s, or L3s – both within and beyond the Ethereum ecosystem, creating a truly seamless and unified experience for users and developers alike,” Boiron said.
AggLayer seeks to enhance bridges and intent and solver networks to create a better user experience or independently improve users’ cross-chain experience.
Interoperability Remains A Priority
While advancements around fragmentation are noteworthy, interoperability also remains a challenge for L2s.
Interoperability allows for different L2s to seamlessly connect with one another. Kol pointed out that Ethereum L2 developers need to prioritize interoperability since networks are competing for both users and assets.
“As new entrants, their success depends on making it as easy as possible for users to access their chain, no matter where those users or assets currently reside,” Kol explained. “They can’t expect users to jump through hoops to get there. Instead, they need to focus on providing the simplest, most seamless pathway for users – and that starts with identifying the right interoperability solution and implementing it.”
Ethereum co-founder Vitalik Buterin also mentioned in a blog post last week that while L2 networks have achieved major milestones, faster adoption of these solutions and greater interoperability is still needed.
Jesse Pollack, creator of L2 network Base, told Cryptonews that there is a lot of value associated with interoperability.
“This is a huge area of focus for us at Base,” Pollack said. “Ultimately, to get a billion people on-chain, we need the technology to ‘just work.’ People who use web2 apps don’t pause to consider what infrastructure those apps are built on. We need to get to that same place on-chain, and interoperability is key to making that happen.”
Pollack added that in order for the on-chain economy to scale, user wallets are key.
“For Base, a big area of focus for this year is simplifying wallet experiences and abstracting away complexity for end users.”
Interoperability Challenges
Although solving interoperability remains a high priority for the Ethereum ecosystem, a number of challenges remain.
Matthew “mteam,” co-founder of Spire Labs, told Cryptonews that Ethereum builders need to be careful about the tradeoffs that certain interoperability designs introduce.
“Interoperability should be a priority, but there are good and bad ways to do it,” Matthew said.
He elaborated that one of the greatest challenges to interoperability currently is standardization and alignment.
“The major L2 ecosystems like the Optimism Superchain, Arbitrum, and zkSync are all working towards their own interoperability standards for their L2 clusters, but we have seen less interest from these major players in cross-cluster interoperability,” Matthew explained.
Echoing this, Tarsi pointed out that L2s are not collaborating with each other because they’re self-interested.
“They’re each trying to build their own form of interoperability, which inherently makes them not compatible with one another,” he said. “For example, you might have interoperability within the Optimism ecosystem that is incompatible with the Arbitrum ecosystem.”
In order to solve this challenge, Matthew shared that Spire Labs is building the technical tools to accelerate the effective re-unification of fragmented L2s.
Therefore, he believes that substantial progress around L2 interoperability will be achieved as 2025 progresses.
As for fragmentation concerns, Kol mentioned that this should no longer be an issue.
“By the end of this year, I believe the progress will be so obvious that anyone still talking about fragmentation as a serious issue will come across as either uninformed or engaging in FUD,” he commented.
Source: cryptonews.com
