Ethereum L1’s Role in Tokenization Boom Sparks Debate Among Analysts

The Ethereum mainnet (L1) is facing criticism for its negligible role in the growing tokenization boom, despite its leading position in the blockchain space. Analysts are questioning whether Ethereum L1 will be overshadowed by its Layer 2s (L2s) as the demand for tokenized assets surges. Gabriel Shapiro, an analyst, argues that Ethereum will still benefit, whether companies choose to tokenize on the mainnet or build their own L2s, citing Robinhood’s Robinhood Chain as an example. However, Lorenzo Valente, head of crypto research at Ark Invest, points out that Ethereum L1 has nearly zero traction in tokenized stocks on spot decentralized exchanges (DEXes), where overall volumes have risen to 12%.

Valente emphasizes that tokenization will reshape the on-chain economy, with tokenized equities expected to be the fastest-growing segment over the next two years. He calls for a clear vision from Ethereum on what should remain on L1 and what should move to L2s. Luigi DeMeo, Chief Strategy Officer at Aave, agrees, warning that Ethereum risks falling behind if it does not take an active role in this space. Marius Smith, co-founder of Ethereum Institutional, disagrees, asserting that supply, not volume, is the true measure of success, and that Ethereum leads in this regard.

Smith also argues that BNB Chain’s high DEX volume is subsidized and that Ethereum’s focus should be on winning issuers and regulated venues rather than chasing subsidized trading activity. The tokenized securities market is currently valued at $3.2 billion and is projected to reach $2 trillion by 2028, with major tech and financial players like Google, traditional brokers, and banks also entering the space. The future market share of the Ethereum ecosystem in this rapidly growing sector remains uncertain.