Ethereum's Scaling Fails to Boost Governance Token Values

The Ethereum L2 ecosystem has seen significant growth in recent times, but surprisingly, this hasn't translated to higher token values for its governance tokens. Over the past month, most major L2 governance tokens have taken a hit, despite the overall scaling ecosystem expanding.

Investors usually expect an increase in user activity and transactions to boost token prices, but that's not happening here. Transaction counts are up, new apps are launching, TVL is steady, and institutions are building on Ethereum scaling tech, yet the governance tokens keep sliding.

Ethereum co-founder Vitalik Buterin suggests that L2s need to move beyond just scaling and carve out a niche for themselves, such as specialized VMs for privacy or extreme speed. He advises L2 teams to commit to at least stage 1 security for any ETH or Ethereum asset handling.

Several upgrades could improve token economics, including shared sequencing, based rollups, and interoperability projects like AggLayer or Superchain. These may eventually create a tighter link between network usage and token value.