Too Many Layer 2s on Ethereum? That's Why This L2 Is Pivoting

Manta Network is pivoting from being solely an Ethereum Layer 2 to focus on application-layer solutions and user acquisition, driven by the commoditization of L2s and insufficient user adoption in the crypto space.

• Manta Network is pivoting from an L2 to focus on application-layer solutions for user acquisition and revenue.

• The L2 landscape has become commoditized with hundreds of networks, necessitating a shift towards use cases.

• The future of L2s involves horizontal scalability, with applications potentially using multiple or ephemeral L2s.

Manta Network's co-founder, Kenny Lee, explains their pivot from solely building an Ethereum Layer 2 to focusing on application-layer solutions to drive user acquisition and revenue. This strategic shift is a response to the rapid commoditization and proliferation of L2s, coupled with a lack of significant user growth in the broader crypto ecosystem. Manta aims to expand the 'pie' by building use cases that attract the next wave of users, rather than fighting for a limited existing user base.

The L2 Landscape Evolution

• 00:02:47 Manta Network observed a significant shift in the L2 landscape, evolving from a few L2s in 2023 to hundreds by 2025, leading to commoditization and a lack of clear differentiation among infrastructure providers. Initially, Manta stood out by leveraging Celestia for data availability, which offered lower gas fees and higher throughput compared to other L2s settling solely on Ethereum. However, this advantage diminished as more L2s emerged, prompting Manta to seek new strategies for innovation and user adoption.

• 00:06:36 The future of L2s is envisioned as moving towards horizontal scalability, where applications might exist across multiple L2s or spin up ephemeral L2s as needed, similar to virtual machines in cloud computing. Kenny Lee suggests that individual L2s alone will be insufficient to handle the massive user scale seen in successful Web2 applications like Duolingo (20 million DAUs) compared to leading Web3 apps (e.g., Pump Fun on Solana with 300,000 DAUs). He believes L2s will likely become application-specific, with some applications spanning multiple L2s for broader specificity.

• 00:13:33 Regarding different blockchain strategies by institutions, Robinhood's choice to launch an L2 on Ethereum is seen as a direct-to-consumer approach leveraging an existing large user base for a specific application. Stripe and Circle's decision to build their own Layer 1s is attributed to their nature as platforms rather than direct-to-consumer applications, serving as payment terminals or stablecoin issuers. While existing Web2 entities have an advantage in funneling users, converting them to on-chain activity still presents significant friction and challenges.

• 00:22:50 The crypto space faces a challenge in incentivizing long-term building and utility over short-term gains from tokens with limited purpose. Manta Network's co-founder, Kenny Lee, emphasizes that founders driven by solving real problems and contributing historically to the space are less likely to abandon projects for quick profits. The current trend of lowering standards for token issuance, leading to many utility-less tokens, creates an easy exit for some, but a shift towards focusing on token buybacks and revenue as performance indicators suggests a maturing industry prioritizing sustainability.