Ethereum ‘is dying while L2 dances on its grave,’ claims investment firm CEO

In a pointed statement on X, Justin Bons, founder and chief investment officer of Cyber ​​Capital, one of Europe’s oldest cryptocurrency funds, expressed a critical view of Ethereum’s current trajectory, stating that “Ethereum is dying while L2 dances on its grave.” Bons argues that Ethereum ($ETH) is struggling to maintain its fee revenue due to inadequate network capacity, while Layer 2 (L2) solutions are capitalizing on this limitation by keeping Ethereum’s capacity restricted.

Bons states: “ETH cannot sustain high fee revenue because it lacks capacity. At the same time, L2s are experiencing record levels in usage and fees while pushing to keep ETH capacity low.” He characterizes this dynamic as parasitic, where L2s benefit at the expense of Ethereum, particularly following the implementation of EIP-4844 (Proto-Danksharding), which Bons says has precipitated a collapse in fee revenue for Ethereum. His comment suggests that the fee burning mechanism, meant to offset inflation by making Ethereum deflationary, can no longer keep pace due to the diversion of fees to L2s.

Bons argues that this scenario has created a “parasitic relationship” between Ethereum and its L2 counterparts. He believes that L2s, while designed to scale Ethereum’s capacity by handling transactions off-chain, now operate almost independently, thus fragmenting the ecosystem. This fragmentation, according to Bons, is breaking down liquidity and composability — crucial elements that facilitate smooth operations across the#Ethereumnetwork.