Ethereum co-founder Joe Lubin discussed the future of the smart contract network at the Digital Asset Summit and said layer-2 (L2) scaling networks would continue to be central to the Ethereum ecosystem.

In an exclusive interview with Cointelegraph’s Turner Wright, Lubin said applications will require next-generation databases powered by high-throughput blockchain technologies. The Ethereum co-founder added:

“The Ethereum ecosystem is so big and so mature that it will be best for new kinds of databases — new kinds of layer 2 networks — to set up shop, as layer 2s of Ethereum. We have our own that has some great characteristics called Linea.”

“Another great application, or great layer 2, that’s emerging soon is called MegaETH,” Lubin continued.

The Ethereum co-founder ultimately concluded that newer layer-1 chains will have a tough time competing with the Ethereum network, which already features robust architecture and security guarantees.

Joe Lubin speaking at the Digital Asset Summit. Source: Digital Asset Summit

Related: Ethereum pushes back Pectra upgrade to conduct third testnet ‘Hoodi’

Investors have doubts about layer-2 approach

According to L2Beat, there are currently over 140 unique scaling solutions for Ethereum, including 60 rollup networks.

Investors have criticized Ethereum’s layer-2 networks as parasitic elements that drain the layer-1 network of revenues while only contributing minimal economic value to the base layer.

Ethereum’s average gas fee dropped by 95% following the Dencun upgrade in March 2024, which dramatically lowered transaction fees for layer-2 networks.

This reduction in transaction fees caused a 99% collapse in revenue on the Ethereum base layer by September 2024.

Network fees on the Ethereum layer-1 flatline following the Dencun upgrade. Source: The TIE Terminal

Since that time, the price of Ether (ETH) has generally been in decline, plummeting to a recent low of approximately $1,759 on March 11 and leading many analysts to predict a further price decline in 2025.

Data from Farside Investors shows outflows from Ether exchange-traded funds (ETFs) have continued for 11 consecutive days amid a broader downturn in the crypto markets.

The most significant day of outflows occurred on March 13, when investors pulled a collective $73.6 million from ETH ETFs as they dumped risk-on assets for less volatile alternatives such as cash, government securities and dollar-pegged stablecoins.

Magazine: MegaETH launch could save Ethereum… but at what cost?