Ethereum’s Future on Trial: Can Layer-2 Networks Handle the Next Bull Run?

Ethereum’s core network, known as Layer 1 (L1), processes only around 15–30 transactions per second (SolidityBits), a fundamental limiter compared to newer platforms like Solana or Avalanche. Historically, that bottleneck has caused network congestion during peak activity, leading to substantial fee hikes that deter everyday users. Gas prices spiked to an average of around $196 per transaction by May 2022, as reported by Grayscale Research, largely reflective of the peak congestion and not necessarily limited to swap or DEX transactions.

As Ethereum’s user base expanded, engineers pivoted to Layer-2 (L2) platforms, secondary chains built atop Ethereum that batch multiple transactions together and then settle them to the mainnet. By offloading execution, rollups drastically reduce fees and accelerate throughput while preserving Ethereum’s security model.

Two main types of rollups have emerged as Ethereum’s most prominent scaling solutions. Optimistic rollups operate on the assumption that transactions are valid by default but allow for fraud-proof challenges if malicious activity is suspected. In contrast, zero-knowledge rollups, or ZK-rollups, use advanced cryptographic proofs to instantly verify transactions with mathematical certainty. Both approaches have delivered remarkable improvements in scalability, cutting transaction costs by as much as 100 times in certain scenarios.

By mid-2025, adoption of these technologies had translated into visible results. Coinbase’s Base Layer-2 network, for example, recorded daily transaction volumes that surpassed those of Ethereum’s own mainnet. The surge was driven in part by viral apps like friend.tech, which generated significant fee volume shortly after launch.

Beyond rollups, Ethereum has advanced its scalability with Proto-Danksharding (EIP-4844), introduced through the Dencun upgrade in early 2024. This update added a new kind of transaction, known as blob-carrying transactions, which allow Layer-2 networks to store and submit data more efficiently, leading to a significant reduction in transaction costs.

Proto-Danksharding is the first major step toward full Danksharding, a longer-term roadmap goal that aims to massively expand Ethereum’s data availability. Instead of using traditional sub-chains, full Danksharding will rely on distributing large “blobs” of data and data availability sampling. This approach could ultimately allow Ethereum to process millions of transactions per second, enabling rollups to scale at levels previously impossible.

As L2 adoption has exploded, so has liquidity fragmentation. Multiple L2s mean assets and liquidity are spread thin, forcing DeFi users to bridge between networks, raising costs, risks, and inefficiencies.

Still, a 2024 academic study found that liquidity provision across Ethereum and L2s remains fairly aligned, and fragmentation is not yet severe. But researchers caution that without unified liquidity standards, fragmentation could worsen as more rollups launch.

Projects are actively exploring solutions to liquidity fragmentation. For instance, a 2025 academic proposal introduced UAT20, a universal abstract token standard aimed at unifying liquidity across rollups. Meanwhile, ecosystem funding models like Retroactive Public Goods Funding (RetroPGF) have emerged to support tooling and infrastructure development—though broader Ethereum funding mechanisms remain less clearly defined.

The rapid emergence of multiple rollups has created complexity for users. Many developers now stress that seamless interoperability—through bridges or protocols like AggLayer, is essential for adoption. The goal is evident: users should be able to engage with decentralized apps without worrying about which L2 they’re using. Until that ideal is realized, liquidity fragmentation and cross-chain friction remain obstacles.

The next bull run will serve as a major stress test for Ethereum’s scaling stack, encompassing rollups, proto-danksharding, and cross-L2 interoperability. As activity accelerates, the network will face challenges that could determine how effectively it can meet the demands of mass adoption.

One concern lies in concurrency. Complex DeFi interactions occurring simultaneously across different protocols could expose bottlenecks that strain throughput and undermine efficiency. These risks highlight the need for stronger coordination and technical safeguards as decentralized finance expands.

Another area of vulnerability is centralization. Most rollups still depend on centralized sequencers, which are responsible for ordering transactions. While this structure improves performance today, it creates risks of outages during periods of congestion and raises concerns about sequencers extracting value at the expense of users.

Ultimately, Ethereum’s ability to maintain its leadership will depend on whether Layer-2s can withstand the pressures of a market surge without breakdown. If the scaling stack proves resilient, it will reinforce Ethereum’s position at the core of the crypto economy; if not, it may open the door for competitors to capture momentum.

Ethereum’s rollup-centric roadmap offers a credible path to scalability. Rollups and proto-danksharding together reduce costs, increase throughput, and maintain Ethereum’s security guarantees.

But unresolved challenges, fragmented liquidity, sequencer centralization, and uncertain upgrade timelines, could weaken Ethereum’s grip if not solved. Rivals like Solana or TON, which emphasize low-cost and high throughput without complex multi-layer structures, stand ready to capture users if Ethereum falters.

The takeaway is clear. Ethereum’s scaling future depends on execution. L2s work today, proto-danksharding strengthens them further, but real resilience will only be proven when the next bull market arrives.