Nick Tomaino, founder of a blue-chip venture fund 1Confirmation, explains why he sees succesful Ethereum L2s as good catalysts for the Ether price. In this cycle, many skeptics opined that these blockchains siphoned liquidity from the main chain, and, therefore, should be blamed for its pale performance.

Ethereum L2s are great for Ether: Four takes by seasoned investor

Ethereum-based EVM L2 networks are net positive for Ether, a core cryptocurrency of the second blockchain. Such a statement was shared by 1Confirmation’s founder Nick Tomaino with his 67,000 followers on X (formerly Twitter) today, on May 13.

To prove this take, he recalled the success story of Coinbase, a U.S.-leading exchange and originator of Ethereum-based OP Stack blockchain Base. The expert opined that app-specific chain is an endgame goal for every big crypto app.

Ethereum (ETH) has recognized this early and now “millions in USD of ETH” revenue is generated monthly by S&P500 company Coinbase. Also, Coinbase holds hundreds of millions USD of its funds in Ether (ETH), Tomaino added.

Also, Ethereum’s L2s solidify Ethereum’s status as a credibly neutral, internet-native store of value. L2s distribute Ether as a method of payment and investing asset.

This, in turn, boosts the ecosystem effect of Ethereum Virtual Machine, which remains the basis of largest programmable blockchains’ ecosystem in the world.

Flywheel or threat?

Last but not least, thanks to the EIP 1559, the activity in Ethereum-based blockchains contributes to burning ETH tokens.

This combination of factors is set to debunk the false narrative about the L2’s success being bad for Ethereum and Ether, Nick Tomaino concludes.

Largely, his followers agreed with the statement highlighting that Ethereum’s L2 adoption gives a spin to the Ethereum (ETH) flywheel, not undermining it.