When choosing between investing in ETH and L2, we can compare from the following aspects:
1. Historical performance
Although the number of listed L2 projects has increased, their total fully diluted valuation (FDV) as a proportion of ETH has remained stable.
The increase in L2 projects has not taken up a larger share of the ETH market value as a whole, but has shown a shrinking trend. More L2 projects have not led to the growth of ETH TVL, but have led to market fragmentation and insufficient liquidity.
2. Valuation and price-performance ratio
Currently, the total FDV of major L2 tokens is approximately $40 billion, with an annualized fee of $40 million and a valuation multiple of approximately 1,000 times.
This is in stark contrast to DeFi protocol valuation multiples, which typically range from 15-60x.
It is worth noting that the implementation of EIP-4844 resulted in a reduction in Gas and an increase in transaction volume, but did not significantly increase overall fee income. The current L2 cost has dropped significantly to US$3 million to US$4 million per month, showing an exponential decline.
3. Public chain narrative logic that is different from the previous cycle
Although in the long term, L2 has the potential to generate significant fee income, such as $150 million per year.
However, there is currently no shortage of block space between L2 and high-throughput chains (such as Sol, Sui, Apt, etc.).
The limiting factor mainly lies in the applications that utilize these block spaces. In the next few years, mobile markets are likely to reward the application layer rather than the infrastructure layer.
To sum up, judging from the historical performance, valuation and cost performance, and public chain development trends, the investment choice between ETH and L2 is not clear at a glance. Investors need to consider multiple factors, including market dynamics, technological developments and project specifics, to make informed investment decisions.
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