The era of token narratives comes to an end, and the real economy will rely on Ethereum L1+L2 to build on-chain businesses.

Written by: @ryanberckmans, Ethereum community member

Translated by: Saoirse, Foresight News

Travis Kling presented a viewpoint this week: Is there an obvious conclusion today — that businesses working on real endeavors have no interest in the existing various L1s and L2s? His first example was Robinhood. However, Robinhood is precisely the perfect counterexample: when real enterprises make decisions based on business logic, the vast majority will choose the Ethereum L1+L2 architecture.

(Note: Travis Kling is the founder and Chief Investment Officer of the crypto asset management firm Ikigai, with years of investment experience in Wall Street institutions like Point72, and is a well-known macro investor in crypto.)

Robinhood chose Ethereum as the underlying L1 and subsequently built its own Ethereum Layer 2 network relying on Arbitrum technology. Robinhood Chain relies on Ethereum Blob to achieve data availability, using ETH as the native Gas token, and features a standard cross-chain bridge secured by Ethereum.

This does not deny the Ethereum L1+L2 model but rather confirms that this architecture is operating according to its intended design.

The deeper core lies in the vastly differing incentive mechanisms of the participants. The early crypto industry built public chains and chose technology stacks with the aim of issuing tokens; meanwhile, the real-world on-chain economy that is emerging is gradually establishing Ethereum L1+L2 as a foundational standard for cash flow businesses.

These two types of participants have entirely different objective functions. As the structure of market participants shifts, the advantages possessed by Ethereum will become increasingly pronounced.

Old Crypto Economy: Everything Optimized Around Tokens

The "real enterprises serving real users" referred to in this article follow the classic business model: creating products that consumers need, earning cash flow through service provision, and enhancing the equity value corresponding to that cash flow.

The "real users" here need comes from normal economic activities, not merely from speculative demand generated by a new round of token issuance. Of course, native crypto users also belong to the category of real users.

This is not a judgment of the usefulness of various protocols or whether builders are purely motivated; it is unrelated to moral considerations. The core distinguishing factor is the economic objectives of the operating entities.

The value of a token comes from only three sources:

1. Cash flow: possessing a reliable claim to future cash flows, akin to on-chain equity or bonds;
2. Utility value: providing holders with privileges to access, control, and govern a high-value system. Even without cash flow, tokens that can control critical resources still have value;
3. Monetary premium: people are willing to hold the asset long-term, convinced that it will be recognized and accepted by others in the future. The asset transforms into a medium of wealth storage, becoming an ultimate value target, rather than just a certificate waiting to be redeemed for rights.

Monetary premiums exist in reality, but maintaining them is extremely difficult. They require a strong network effect to form around market confidence, liquidity, ecosystem proliferation, scenario integration, and practical applications. Gold, the US dollar, Bitcoin, and Ethereum each establish different forms of monetary premiums, and almost no other assets can achieve that.

Looking back, since the proliferation of programmable crypto assets, the vast majority of participants in the industry do not belong to formal enterprises seeking stable cash flows. Their business models mostly revolve around selling tokens, with token value reliant on utility expectations, monetary premiums brought by speculation, or far-fetched, hard-to-realize cash flow stories.

Some pathways are quite direct: developing a protocol and directly issuing a native token; others may take a circuitous route: obtaining funding from ecosystem projects reliant on token fundraising, then selling the acquired tokens for cash; there are also some projects that genuinely plan to earn income in the future. However, token valuation and reasonable cash flow expectations are severely disconnected, and the core business model still relies on market confidence in the token.

Almost everyone is copying similar plays, so this model gradually becomes the norm in the industry.

Of course, significant exceptions exist: centralized exchanges largely belong to purely cash flow businesses, inherently adopting multi-chain strategies, connecting new public chains akin to adding new recharge and withdrawal channels; some stablecoin issuers are also cash flow enterprises, initially serving users within the crypto circle and now expanding into the broader real economy.

These exceptions rather confirm the core viewpoint: enterprises aiming to earn cash focus on choosing infrastructure to maximize their own business benefits, rather than to promote token appreciation.

Incentive Mechanism Ultimately Shapes Technical Architecture

The objective function of a subject determines the choice of technical route. If an enterprise's core mission is to operate cash flow businesses, the blockchain is merely infrastructure. The purpose of choosing a public chain is to reduce risk, optimize products, reach users, and maintain profits.

If the primary goal is to monetize tokens, the choice of public chains can be extremely flexible. Whichever public chain's ecosystem funding they receive, the project will develop on that chain; upon observing the success of a certain protocol on Chain A, they will replicate similar products on Chain B for easy investor valuation comparisons; as long as they aim to issue new tokens, brand new L1s, L2s, application chains, Gas tokens, governance systems, niche technology stacks can all be packaged as selling points.

The issue is not the diversity of technology itself. The crypto field will still see an influx of numerous applications, protocols, Layer 2 solutions, and dedicated execution environments, ushering in a Cambrian explosion of innovation. What truly distorts the industry is the mentality that any new idea must independently build a sovereign ecosystem, establishing its own L1, preparing a security budget, cultivating liquidity, issuing native monetary assets, entirely disregarding whether there is actual demand for the business itself.

As the industry's focus gradually shifts to cash flow entities, innovative explorations will not stop but will increasingly be built on a unified foundation. Enterprises will concentrate on differentiated development at the application layer and Layer 2, relying on Ethereum L1 for settlement, security assurance, liquidity carrying, and value storage. Ultimately, the industry will form a dumbbell pattern: diverse applications flourishing at the edges while foundational infrastructure continues to consolidate.

The prevailing logic of the old crypto industry: building an entire technical architecture around the tokens they want to sell to investors.

Market Participants are Iterating

The future of the crypto industry will undoubtedly differ from the past, and the core reason is the change in players.

The previous US government continued to suppress the development of the on-chain industry, but the winds have now reversed. The "GENIUS Act" has officially landed, establishing a federal regulatory framework for payment-type stablecoins; the EU MiCA regulatory legislation has come into full effect. Securities firms, payment companies, banks, asset management institutions, and governments around the world are all beginning to strategize for stablecoins, asset tokenization, and on-chain business.

This does not signify that all regulatory challenges have been resolved, but now large institutions can finally plan their on-chain businesses in the long term.

We are at the starting point of large-scale popularization along the S curve.

When the industry matures, crypto and the traditional financial system will no longer be disconnected. Assets, currencies, transactions, finance, identity, and trust will all be jointly borne by on-chain and off-chain systems. Ultimately, the term "Web3" will slowly fade from public view, similar to how "Web2" did; everything will simply be referred to as the internet.

At that time, the proportion of real enterprises serving ordinary users of the real economy in the crypto market will significantly increase. Not only will the number of enterprises rise, but even more critically, the amount of funds, user scale, total assets, and institutional influence will all tilt toward these entities.

They will no longer be crypto projects desperately searching for business models solely to support the token narrative, but rather real companies leveraging blockchain to improve existing businesses and creating entirely new cash flow tracks.

The market landscape will thus be rewritten. The infrastructure selection logic of the token economy era is wholly inapplicable to cash flow real economies.

Real Enterprises Purchasing Blockchain Infrastructure

Real enterprises can bear very low trial-and-error risk budgets for infrastructure. They do not wish to bear the extra burdens of consensus mechanisms, cross-chain bridges, validator systems, Gas assets, governance tokens, liquidity operations, etc., that are all unrelated. Any new technology module must create user value; otherwise, it counts as a liability.

Blockchain should serve businesses, not the other way around.

Some businesses are naturally suited for multi-chain layouts: exchanges, wallets, stablecoin issuers, and various asset issuance platforms require extensive user coverage. But even when operating on a multi-chain basis, it does not mean that all public chains hold equal status; typically, one core public chain will be selected to undertake liquidity, asset issuance, settlement, data storage, and deep ecosystem integration.

The vast majority of on-chain businesses will focus on deeply cultivating one main chain or a few chains within the same system.

Enterprises generally have three types of choices:

1. Ethereum L1: When the business pursues extreme decentralization, trustworthy neutrality, and minimum risk, it opts for it. L1 transaction costs are higher but exchange for the industry's strongest shared security environment;
2. Building their own Ethereum L2: If enterprises need operational control, high customization, compliance capabilities, stable cost models, low latency, and high throughput, they build a dedicated Layer 2. This allows them to operate an independent blockchain according to their needs while remaining bound to the Ethereum underlying;
3. Utilizing mature shared Layer 2: If the business size is not sufficient to support an independent Layer 2, it directly deploys on existing public Layer 2s, with Base, Arbitrum One, and Robinhood Chain becoming common development platforms.

Such enterprises will still engage in cross-chain asset operations, outputting products externally, connecting with other networks. Having a core main chain does not mean being closed off; asset interoperability and business external connections have become standard features of on-chain businesses.

However, the core belonging chain is crucial as it determines the entire system's security foundation, standard data status, liquidity interactions, operational mode, and long-term developmental dependencies.

Why the Ethereum L1+L2 Architecture Fits Enterprise Needs

Ethereum accurately splits large enterprises' two core demands: L1 builds a highly decentralized, trust-neutral, and liquidity-abundant global settlement hub; various L2s form a diversified execution environment market that can achieve high speed, low cost, vertical customization, and independent operational control.

The underlying remains robust and neutral, while the upper layer flexibly adapts to different operational entities, legal jurisdictions, differentiated products, and user groups. Layer 2 not only achieves Ethereum scalability on a technical level but also expands on an institutional level: organizations can operate their businesses according to their rules without requiring the global underlying public chain to accommodate their needs.

Independent L1s can also provide operational autonomy and high performance. In certain scenarios, having full control over consensus and data availability holds value. But full sovereignty comes at a steep price.

A brand-new independent L1 must be built from scratch while continuously maintaining security budgets, validation nodes, cross-chain trust assumptions, liquidity, development tools, ecological cooperation, and institutional credibility.

It will form a brand new island of security and liquidity, significantly increasing friction costs for interoperability with Ethereum L1 and its vast Layer 2 ecosystem. Enterprises should only incur this expense if the independent consensus mechanism itself can create immense commercial value.

For the vast majority of enterprises, the benefits of building an independent L1 do not justify the overall costs.

Customized Ethereum Layer 2 can nearly capture the majority of advantages of an independent L1: high TPS, control over execution logic, independent upgrades, customizable fees, transaction ordering, latency control, access rules, and product-specific functions.

At the same time, Layer 2 additionally possesses advantages that native L1s can hardly build in the short term: settling and data availability based on Ethereum, a native standard cross-chain bridge, seamless connection to existing Ethereum-based assets, and cross-chain interactions that maximize minimizing trust requirements, built on the same underlying.

The design details of Layer 2 solutions remain crucial. Administrative permissions, upgrade keys, proof systems, and withdrawal assurance mechanisms determine how much underlying security users can inherit.

Even if the operator has significant control over Layer 2, it still relies on Ethereum L1 to establish an unbreakable settlement foundation. Enterprises engaging in pure business do not need to independently operate or secure an underlying L1.

An Ethereum Layer 2 is both an independent blockchain and a component of the Ethereum economic system. Operators can customize the execution environment while reusing Ethereum for settlement, Blob data storage, and cross-chain interoperability; most will deeply integrate ETH into the ecosystem, directly using ETH as the Gas token; the native standard cross-chain bridge allows L1 assets to flow into Layer 2 economies with low trust thresholds.

Every newly added Layer 2 will form differentiated product tracks, continuously amplifying Ethereum's network effects.

Robinhood's Choice is Highly Indicative

The development path of Robinhood offers textbook-like reference value. The company first launched its stock token business on the mature shared Layer 2 Arbitrum One; after successfully validating its business model and identifying its requirements, it launched a dedicated blockchain based on the Arbitrum platform.

This could become the commonly adopted development path in the industry: first verifying products based on shared infrastructure, and upon meeting business scale, product demands, and profitability criteria, then upgrading to build a dedicated L2.

Robinhood Chain is specially tailored for financial services. Leveraging Arbitrum technology, it achieves 100 milliseconds latency, predictable trading prices, and high throughput, and the entire infrastructure matches Robinhood's requirements for performance, security, and regulatory compliance.

At the same time, Robinhood Chain is fundamentally still an Ethereum Layer 2: relying on Ethereum Blob to carry data, ETH acting as Gas, and a standard bridge connecting to Ethereum that does not require third-party validation nodes.

This is the standard model for real enterprises to build on-chain products.

Robinhood does not need to issue its own Gas token out of thin air and then convince the market that the token has long-term monetary premiums. Robinhood itself is a publicly listed company with equity, and all revenue growth comes from user activity, products, existing assets, and the cash flow generated by transactions.

Blockchain is merely infrastructure.

Using ETH to pay for Gas is a purely rational business decision. Layer 2 itself needs to pay ETH to Ethereum in exchange for L1 underlying services; ETH is liquid and has comprehensive native adaptability in the ecosystem. If a separate exclusive Gas token were to be issued, it would merely add additional burdens of promotion, liquidity maintenance, price volatility, and reputational risks, failing to improve Robinhood's core business.

The metric for evaluating Robinhood's success is in the application-layer products and off-chain derivative businesses, not whether it can create a brand new asset with currency properties.

Therefore, some people's understanding has misconceptions: some claim that Robinhood's self-developed blockchain indicates it is abandoning the existing L1/L2 system. In fact, the opposite is true: Robinhood simply does not want to share a set of execution environments with everyone; it has not abandoned Ethereum but instead chosen Ethereum as the underlying main chain for its own blockchain.

The Ethereum L1+L2 architecture is no longer just a theoretical concept.

Coinbase made the same choice when building Base. Coinbase is not an Ethereum-promoting institution, and Brian Armstrong (Coinbase co-founder and CEO) has publicly stated that he is more bullish on Bitcoin in the long run. However, when selecting foundational infrastructure for on-chain businesses, it still built Base as an Ethereum Layer 2.

This choice is highly persuasive — the decision's starting point is commercial benefits, unrelated to belief preferences.

When the corporate goal is to create cash flow businesses, rather than hosting token issuances, it will ultimately yield rational business judgments. The currently default optimal commercial solution is: Ethereum L1+L2.

What the Structural Changes Mean for Ethereum and ETH

The shift in market participant structure will be greatly beneficial for Ethereum in the long term.

In the past, the competitive landscape of public chains was largely dominated by projects enthusiastic about issuing tokens, offering ecological subsidies, and relying on token valuation narratives.

Going forward, the competitive subjects in the industry will shift to real enterprises, with decisions centered on safety, user expansion, operational control, market coverage, liquidity, and cross-chain interoperability, all serving cash flow businesses.

Market demand will continue to gravitate toward Ethereum's dumbbell architecture: L1 will bear extreme safety and liquidity needs; various L2s will accommodate scalability, customization, and self-operation demands.

The path to Ethereum's popularization does not rely on forcing all enterprises to squeeze into a single shared execution chain but rather on becoming the foundational settlement, security, liquidity, and asset layer for a myriad of upper layer environments.

This also benefits ETH. The growth logic of ETH relies on building a global monetary network and accumulating market consensus; it does not belong to cash flow businesses.

ETH is a high-quality value storage target and the native asset of Ethereum's global settlement layer. It serves as collateral, liquidity carrier, treasury reserve asset, and productive asset in the entire ecosystem, continuously growing into the ultimate storage asset.

As more real enterprises conduct business based on Ethereum, they will continuously disseminate ETH to a massive user base, embedding ETH in various products and expanding application scenarios.

Liquidity and consensus will deepen, further solidifying ETH's monetary premium, and the essence of the monetary premium is strong network effects.

Old crypto economy: designing a complete technical architecture around the tokens they want to sell. Emerging on-chain real economy: choosing technical architecture around the products they want to deliver to customers.

The optimization targets of the two types of participants are entirely different and will shape a fundamentally different competitive landscape for public chains.

Robinhood is not an exception, but rather a lighthouse.

Real enterprises choose Ethereum L1 when pursuing the strongest neutrality, lowest risk, and top-level liquidity sharing environment; they build Ethereum L2 when requiring operational autonomy, customization capabilities, and high performance; if their business size cannot support an independent blockchain, they deploy on mature shared Layer 2s (mostly Ethereum-based L2s).

Enterprises make this choice not because they are extreme believers in Ethereum, but purely for business considerations.