Ethereum’s commitment to layer-2 (L2) scalability may pose challenges for Ether's value, according to a report from Binance Research. It indicates that L2 networks, designed to enhance the mainnet's scalability and reduce transaction costs, could detract from Ethereum’s base layer, ultimately impacting Ether's price. The report points out that Ethereum’s dominance in decentralized exchange (DEX) volume is threatened by competitors like Solana and BNB Smart Chain due to issues like slow and costly transactions, fragmented developer attention, and reduced value accrual to the L1. Upcoming upgrades, namely the Pectra and Fusaka upgrades, focus on L2 scalability and Ethereum's role as a data availability layer. However, these may not immediately enhance Ether's value accrual. Thus, aligning incentives between Ethereum and L2 solutions through mechanisms like fee sharing is crucial for sustaining value flow back to ETH. Overall, while Ethereum aims to scale with L2s, it must ensure its mainnet remains competitive against rising alternatives.

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