Are Alt-L1s over? Security, costs drive smaller chains to Ethereum

Running an independent blockchain has always come with a particular promise: control.

A standalone Layer 1 architecture allows projects to be the masters of their own destiny, set the rules of consensus, maintain their own validators and build infrastructure around their users, without relying on any other network.

But with great power comes great responsibility — and considerable expense.

Blockchains need enough users, developers and economic activity to support the infrastructure that secures them. For some smaller networks, keeping an entire ecosystem afloat no longer makes economic sense.

Zilliqa is the latest project to confront that reality, announcing plans last week to move away from its L1 architecture and become an Ethereum-based Layer 2 (L2) instead:

“We know it’s not great. For nine years we built and ran our own Layer 1. It hasn’t worked.”

“Usage never reached what a standalone chain needs,” the post explained. “Funding and liquidity for standalone L1s dried up. The recent hacks showed how much it takes to secure a chain alone. The data is onchain for everyone to see.”

Zilliqa is not alone.

Blockchain ecosystem Gnosis (which has always been Ethereum-adjacent) is also working to transition Gnosis Chain into an Ethereum-based network through its Ethereum Economic Zone (EEZ) initiative. Its RollupX test network intends to show how participating chains can share Ethereum settlement and synchronous composability as native rollups.