Galaxy head of research Alex Thorn criticized the business model of many Ethereum (ETH) layer-2 (L2) blockchains as “ETH extractive.”

In an Aug. 6 social media post, Thorn argued that L2 networks retain most of the fee revenue while contributing relatively little back to the Ethereum L1. 

Thorn added that most L2s are controlled by single companies or foundations, which means “very little value accrues to ETH holders,” and “most L2s don’t even stake back the ETH they collect in fees.” 

Post EIP-4844

Pointing to post-EIP-4844 dynamics, Thorn noted that aggregate L2 blob confirmation costs and L1 gas spend have hovered around $10,000 per day, while L2s earn from $100,000 to $400,000 daily in user fees.

As a result, L2 earnings leave “a nice margin even including running the chain.” Blobs are dedicated spaces offering data storage used by layer-2 blockchains built on top of Ethereum.

He also contrasted payments from Base to the Optimism Collective, since Base uses the OP Stack, versus payments from L2s to Ethereum. Over the last 180 days, Base paid $4.4 million to OP, while all L2s combined paid $3.05 million to Ethereum L1 for blobs and gas.

Thorn further claimed Coinbase made $14.9 million in Base fee revenue in Q2, with $443,000 in L1 data costs and $2.16 million paid to OP, saying “OP is literally making 4.8x more off Base than Ethereum is.” 

The critique culminated in a broader alignment question, to which Thorn responded:

“…They aren’t really ‘eth aligned…’ they look pretty ‘Eth extractive’ to me.”

Long-running debate

Base graduated to Stage 1 in April on data aggregator L2Beat, an intermediate decentralization tier envisioned by Ethereum co-founder Vitalik Buterin. 

Stage 1 indicates improved fault-proofs and governance safeguards, while Stage 2 is defined by an L2 having no group of actors that can post a state root other than the output of the code, even unanimously.

The L2 powered by Coinbase was among other chains that recently updated their security measures to prevent ways to block messages to the mainnet other than compromising at least 75% of the network’s security council. 

Thorn’s argument revives a long-running debate over how much economic value L2s should return to Ethereum versus to their operators or upstream collectives. 

The post-4844 cost structure lowered L2 data costs by introducing blobs, but the balance between user fees retained by L2s and L1 spend and staking remains contested.

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The annual Bitcoin Conference in Las Vegas is a vital event for the Bitcoin ecosystem, with companies announcing breakthroughs, partnerships and offering speeches that shape the story of digital assets. For many people, the vast amount of information is overwhelming. As I attended several meetings and am familiar with the company attending through my work at UTXO, I highlighted the main panels and expected developments for 2025, focusing on Bitcoin Layer 2 (L2) and the BTCFI ecosystem.

The full agenda is available using this link. https://b.tc/conference/2025/agenda

This is Expected presentations and panel breakdowns categorized by key themes:

BITVM2 Announcement

Since the introduction of BITVM in 2023, the top Bitcoin development teams have been tirelessly trying to convert centralized side chain designs into true Bitcoin rollups and unauthorized L2s. At the 2025 conference, we hope that these teams will unveil the first version of the BITVM2 bridge and provide important details about the mechanics. When the BITVM2 Bridge is live, you can unlock a wide range of decentralized BTC use cases that all Bitcoin holders can access. May 2025 could mark a turning point and potentially demonstrates the decline of centralized “crypto” and Defi projects in favor of the Bitcoin native economy. As the proverb says, with a long enough timeline, everything comes back to Bitcoin.

L2 Partnership

Bitcoin L2 faces a sudden challenge. Compete with established crypto players while earning Bitcoiner’s trust. The conference is likely to feature announcements of key partnerships, particularly at the infrastructure level, addressing long-standing barriers to BTCFI adoption. These collaborations could enhance the reliability and functionality of L2 solutions and pave the way for wider acceptance.

Lightning and Taproot Assets Innovation

The recent announcement that Teather (USDT) will return to Bitcoin by issuing Stablecoin on Lightning Rails via Taproot assets has sparked great excitement. Expect major updates from companies in this space, especially with regard to Taproot assets and Stablecoin integration. The Lightning Network is ready for domination, and 2025 could be a year to invade the mainstream.

Opcode and governance discussion

With increasing support for the activation of contracts in Bitcoin, governance debates will become the focus due to recent debates over Mempool policies on social media. These panels promise to be intellectually stimulating and provide deep insight into Bitcoin’s core mechanisms and potential fireworks for those following the debate. Participating in these sessions will be the most rewarding experience of the week for anyone looking to understand the future of Bitcoin.

Required Panel

Below is a list of curated panels along the categories above, and what you’ll expect from each. (Note: These predictions reflect my personal perspective and are not conclusive. This list is not exhaustive, but emphasizes high signaling sessions for participants with limited time.)

The most likely panel and keynote speeches related to Bitcoin L2 and BTCFI products: In other words, this is where the main alpha is dropped

Governance discussion

Bitcoin L2S and BTCFI products

L2 and Lightning Discussion