It is officially Base season in crypto-land, as Coinbase’s Ethereum L2 continues hitting record volumes by the day. Found this to be a great breakdown of the interplay between Layer 1 Ethereum and the Layer 2s built on top of it. A cyclical effect exists, which goes as follows:

1. L1 Ethereum provides security for L2s
2. L2s build efficient protocols on top of L1 ETH and settle massive amounts of value
3. Value flows back to ETH the asset, as L2s choose ETH as their native settlement currency

Great example of what Jim Collins’s Flywheel Effect looks like when applied to crypto.