Sandeep Nailwal Warns: Anti-L2 Sentiment Could Shatter Ethereum’s Ecosystem

Polygon co-founder Sandeep Nailwal issued a stark warning about the growing anti-layer-2 (L2) sentiment within the Ethereum community. In a recent interview, Nailwal expressed concerns that this pressure on the Ethereum Foundation could have devastating consequences, potentially \”breaking the entire social fabric\” of the network.

Nailwal, speaking on Cointelegraph’s Chain Reaction show, highlighted the current market conditions as a contributing factor to this negative L2 rhetoric. He noted a correlation between the suppressed Ether (ETH) price and the intensified pressure against L2 scaling solutions. This pressure, he argues, is misguided and dangerously short-sighted.

\”Everybody understands that if Ethereum doesn’t survive, the layer-2s won’t survive,\” Nailwal stated. He emphasized that undue pressure on developers based on price fluctuations could lead to ill-advised decisions with far-reaching negative consequences for the entire ecosystem.

He lauded Vitalik Buterin’s leadership, emphasizing Buterin’s crucial role in maintaining the cohesion of the Ethereum ecosystem, referring to him as the \”DNA\” of the network that has attracted a wealth of talent to build upon Ethereum’s base layer.

Nailwal challenged the conventional layer-1 versus layer-2 framework, proposing a more nuanced perspective. He posits that only Bitcoin and Ethereum serve as true settlement layers, with all other networks functioning as execution layers. This perspective reframes the discussion on competition and interoperability.

He envisions a future where applications build their own blockchains, utilizing settlement layers like Ethereum for finality, ultimately bolstering the Ethereum base layer’s value and facilitating seamless interoperability. He directly addresses the criticism of L2s cannibalizing the base layer, acknowledging the significant revenue drop seen in 2024, but emphasizing the long-term benefits of a thriving multi-layered ecosystem.

Nailwal concludes by asserting that Bitcoin is Ethereum’s only real competitor, but only if it adopts more sophisticated scripting capabilities to rival Ethereum’s smart contract functionality. This highlights the unique position and long-term potential of the Ethereum ecosystem.