The wave of upgrades in March last year indeed caused L2 transaction fees to plummet. A few cents per transaction, at the time it looked like Ethereum was delivering on its scalability promises in a shining moment.

But the numbers on the other side of the ledger are screaming.

ETH's daily burn rate is firmly held at the floor—around 1,000 ETH in good days, dropping to 720 ETH during bad times. For a network that relies on "more users burn more," this signal is already very dangerous.

Frankly, the entire ecosystem is pouring real money into subsidizing L2 growth. What's ironic is that the ones actually profiting from this feast—gaining users and transaction volume—are Layer 2 solutions under a major US exchange. Think about that— the entire Ethereum ecosystem is effectively paying the shareholders of others.

The damage is far more than just "burning a few less ETH."

It has created a structural misalignment: value is stacked on the L1 layer, but the scale is being eaten up by L2 and centralized entry points. No wonder Vitalik later mentioned the "L1 Renaissance"—more of a post-hoc reflection than a technical roadmap adjustment. They finally realize that this unlimited subsidy model is slowly eroding Ethereum's own economic foundation.

The root cause actually lies in Blob. L2 bundles a large number of transactions into Blob data and uploads it to L1, but the key is— the cost of Blob is almost zero. What does this mean? The expansion costs of L2 are being infinitely lowered, and ultimately, these costs are passed on to the ecosystem's economic model.