@costfhh

Layer 2s generate revenue primarily from transaction fees, sequencer profits, and MEV. Sustainability depends on whether these revenue streams offset the cost of security, decentralization, and infrastructure. As competition increases, fee compression may erode profitability. To justify valuations, L2s must capture value beyond raw throughput, such as differentiated ecosystems, app-specific integrations, or shared liquidity advantages. The long-term thesis rests not only on scaling Ethereum but also on building defensible economic moats within the broader modular stack.

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