Synthetix founder Kain: Ethereum's economic model is under pressure, L2 diversion and Alt DA threaten the Mainnet

Wu learned that Kain, the founder of Synthetix, expressed his views on the Ethereum ecosystem and the challenges it faces on Twitter: Ethereum is experiencing a drop in L1 transaction activity due to L2 scaling and Blob (EIP-4844) reducing data availability costs, which has resulted in a sharp decrease in Mainnet Gas fees and ETH burn rates, putting its economic model in jeopardy. Validators previously accepted high burn rates with low yields due to price insensitivity, but with the rise of L2, profits that originally belonged to L1 have been captured, with threats to Mainnet’s fee-earning ability from shifts towards Alt DAs such as Celestia. The core challenge is how ETH can increase fees for block space on L2 to restore profitability; short-term solutions include coordinating the launch of an official L2 or a rental mechanism to allow L2 to give back to L1. Long-term hopes rest on new demands such as tokenization of real assets to stimulate L1/L2 usage. The Ethereum community is skilled at solving such coordination issues but needs to discard irrelevant long-term projects and urgently focus on application breakthroughs to win the competition. It is understood that during a previous Ethereum Foundation AMA, topics such as ‘non-commercial official neutral L2’, ‘L2 vampirism’, ‘Blob fees too low’, and ‘Alt DA’ were mentioned, and the overall stance of the EF is that this is a painful transitional period, leaning more towards solving issues through technological upgrades and long-term growth strategies rather than radical intervention.