@franceslongwuxk

Layer 2 adoption rates directly affect Ethereum’s valuation because they enhance scalability while maintaining security. As transaction costs on Ethereum rise, Layer 2 solutions like Arbitrum, Optimism, and zkSync attract users seeking lower fees. Growing adoption alleviates congestion, increases throughput, and sustains Ethereum’s competitiveness against rival blockchains. Token activity on Layer 2 often drives ETH demand, as gas is still required for rollups and settlements. Strong adoption reinforces Ethereum’s role as a base layer, boosting investor confidence in its long-term value. Weak Layer 2 uptake, however, raises concerns about scalability and competitive pressures from alternative ecosystems.

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