Ethereum Foundation Post: Rethinking the Division of Work Between L1 and L2 to Build the Ultimate Ethereum Ecosystem
Original Title: How L1 and L2s can build the strongest possible Ethereum
Original Authors: Josh Rudolf, Julian Ma, Josh Stark, Ethereum Foundation
Original Translation: Chopper, Foresight News
The ultimate goal of the Ethereum Foundation's Platform team is to drive Ethereum as a unified, scalable system for all users to confidently use.
This article aims to share our views on the relationship between L1 and L2, elucidate the role of each layer, and how we (as an ecosystem) can leverage the advantages of L1 and L2 to create the most compelling platform for all users.
Some of these aspects are already clear, while others will need to be validated through ongoing experimentation and iteration with the community and users.
TL;DR
Goal: All individual and institutional users should have a clear path to leverage, scale, and benefit from Ethereum's core properties.
The best way to achieve this goal is to fully utilize the unique features of each layer, strengthen Ethereum's core properties, and unlock meaningful value for end users through these properties.
As the Ethereum ecosystem evolves, the role of each layer evolves as follows:
· Past: L2's primary mission was to assist Ethereum in scaling, followed by providing differentiation and customization space. Scalability was key.
· Present: L2's primary mission is to deliver scalability while providing differentiated features, services, customized solutions, market positioning strategies, and jurisdictional control. Currently, the biggest drivers are differentiation, control, and innovation.
· L1 serves as a truly permissionless and highly resilient global settlement, shared state, liquidity, and DeFi hub. A robust, scalable L1 layer that does not compromise CROPS (Censorship Resistance, Openness, Privacy, Security) provides a better foundation for the L2 layer.
· L2 provides valuable new functionality, customization, and control to develop its own on-chain economy while extending Ethereum's core properties to more users. A robust L2 network strengthens the Ethereum ecosystem and its center of gravity.
· L2 covers all aspects, establishing differentiated relationships with L1 based on its own needs:
· Those seeking the closest integration with L1 should strive to achieve synchronous composability, full interoperability, shared liquidity, and native Rollup mechanisms.
· L2 with various business models or technical expertise will continue to play a significant role in the ecosystem, offering exclusive capabilities that L1 cannot cover.
The Ethereum Foundation (EF) will continue to research underlying technologies to help L2 seamlessly extend L1's native features, securely enable cross-layer and cross-chain liquidity and asset interoperability; meanwhile, L2 is required to be openly transparent, clearly disclosing its security attributes and verification standards.
In short, both parties play important roles, and actions must align with words.
Introduction
Over the past five years, the Ethereum L1 ecosystem has nurtured a vast L2 ecosystem. Various L2 solutions inherit different native Ethereum features: some fully replicate the decentralized architecture (such as Stage 2 Rollup), some inherit certain security features (such as Validium, Prividium), and some are only compatible with the general EVM standard (not L2).
Many chains are still in development, often starting from independent chains and gradually deepening integration into the Ethereum L1 ecosystem. It is now time for the Ethereum Foundation (EF) and the broader Ethereum ecosystem to update our understanding of the relationship between L1 and L2 networks. The last update could be said to be five years ago when the Rollup-centric roadmap was first proposed as a way to scale Ethereum.
Since then, there have been significant changes. The technology enabling L2 to share Ethereum's security and liquidity and interoperate with it has matured; L2's differentiated competitiveness and user value have become more prominent; L2 itself has grown and fostered an independent community ecosystem; and the scalability roadmap at the L1 layer has evolved to become clearer.
The Ethereum ecosystem needs to face these changes and learn from past successes and failures.
Over the past few months, the future development direction of the Ethereum L1 and L2 relationship has gradually become clear:
· A thriving Ethereum ecosystem must be built on a strong L1 foundation.
· Ethereum L1 will achieve an order of magnitude scalability while maintaining the highest level of security and decentralization, continuing to serve as the core of on-chain economy and DeFi.
· The future will see an ecosystem composed of independent and interoperable L2 chains, offering a higher degree of customization, control, and functionality that L1 cannot provide. These L2 chains choose to root in the Ethereum ecosystem because it is the best choice for their users, community, or enterprises.
· L2 chains will both compete and cooperate to provide a variety of specialized block space, services, and assets.
This article aims to further explain the L1 and L2 symbiosis vision and outline a path for establishing a mutually reinforcing relationship between Ethereum L1 and any chain that wishes to root and become part of the ecosystem.
What Roles Do L1 and L2 Play and How Do They Collaborate?
Ethereum L1 is the world's leading programmable blockchain, unparalleled in user adoption, developer ecosystem, decentralization, anti-fragility, and underlying security. Ethereum L1 is the core of the DeFi ecosystem, aggregating the deepest liquidity across the network. Ethereum L1 now has a clear scaling path while maintaining decentralization and security. Due to the collective efforts of many teams in the Ethereum ecosystem, the development of Zero-Knowledge Proof (ZK) technology has far exceeded expectations.
In the coming years, we will be able to significantly increase the capacity of Ethereum L1 while adhering to its core value vision.
However, no single public chain can accommodate the diverse global on-chain economic demands. Even if Ethereum remains dominant in the future and scales by 1000x, there will still be many different chains because they offer specialized and customized services that L1 cannot provide:
· Specialization for specific applications or use cases
· Non-EVM functionality
· Additional privacy protections
· Pricing Mechanism or Transaction Inclusion Logic
· Ultra-Low Latency or other Ordering Characteristics
· Extreme Scaling Properties of L1 Unmatched
· Specialized Economies, Market Entry Strategies, and Growth Trajectories
· Modular Design to Meet Compliance or other Business Requirements
· Other Improvements or Innovations that can iterate and deliver faster than L1
……
This provides an opportunity for L1 and L2 to establish a mutually beneficial relationship, allowing each to focus on complementary roles.
Why Would Other Independent Blockchains Want to Become Ethereum's L2?
· Cost: Compared to standalone Layer 1 blockchains, L2 replicates Ethereum's top-tier security and decentralization at a very low cost threshold; setting up a globally decentralized validator node incurs high costs, long cycles, and great difficulty. L2 can transfer this responsibility to Ethereum L1, paying as needed without bearing high fixed setup costs.
· Users and Developers: Achieving interoperability with the largest L1 and L2 network globally can attract more users and developers; due to zero-knowledge proof technology, real-time proofs, faster L1 finality and L2 settlements, and mature proxy infrastructure, interoperability and cross-chain user experience will accelerate.
· Interoperability: If designed properly, L2 can securely access L1 assets and DeFi liquidity, user accounts on L1, and any services on L1 such as oracles and ENS.
· Market Exposure: As part of the Ethereum ecosystem, one can benefit from brand and reputation advantages; the Ethereum ecosystem has the best reputation, security record, and regulatory acceptance among all L1s.
What can Ethereum L1 gain from this? Based on our experience and discussions with various ecosystem stakeholders, we believe positioning Ethereum L1 at the core of a growing L2 network can strengthen Ethereum and ETH's unique position in the on-chain economy:
· Creating demand for ETH and providing trust-minimized, secure bridging services between ETH and other assets. ETH serves as a store of value, currency, and more within the Ethereum network.
· Expand Ethereum's network effects (e.g., EVM, developer education, developer tools, user onboarding, and L2 interop)
· Solidify Ethereum as the core of a multi-chain ecosystem and a key settlement and liquidity layer for on-chain economies
· Provide broader business development, growth, and marketing support for Ethereum
· L2 contributes to achieving the core vision of the Ethereum ecosystem. As distributed engines of Ethereum's core attributes (security, scalability, and decentralization), they maximize the number of users deriving sustainable value from Ethereum.
The Ethereum ecosystem should not take these advantages for granted. Some of these advantages remain contentious within the community or require long-term theoretical validation through experimentation, measurement, and analysis. Ultimately, the relationship between L1 and L2 must be symbiotic to succeed. Over the past five years, this relationship has achieved numerous milestones and laid critical groundwork for the future.
What Does This Mean for the Future of L2?
What does this new vision mean for L2 users, their teams, and their communities?
Here are our recommendations:
· L2 should focus on complementing L1 and achieving strategic platform differentiation. Many L2s have made strides toward this vision successfully. They achieve this by innovative features, catering to specific use cases (e.g., application-specific chains), offering new distribution mechanisms, or adopting novel go-to-market strategies. This helps them build their unique communities and extend Ethereum's capabilities to millions of new users.
· L2 should have the freedom to differentiate themselves in various ways based on their vision. We have seen differentiation in scalability, trustlessness, privacy, enterprise compliance, industry focus, community, and a variety of technical innovations.
· L2 can choose to scale all or some attributes of Ethereum based on their goals. Still, they should ensure users can easily understand the security properties they do or do not provide. L2s committed to minimal trust should at least reach Stage 1 and pass an "exit" test, meaning users can safely exit to L1 even in the presence of malicious actors or a failure of the security committee. L2s choosing to be closest to L1 and fully inherit its attributes should progress in these directions:
1) Achieve Stage 2;
2) Synced composability;
3) Become a native Rollup.
· L2 should continue to focus on building wider interoperability and shared liquidity mechanisms to strengthen the entire Ethereum ecosystem.
· L2 should continue to operate in a transparent manner, clearly articulating to the ecosystem its respective security attributes and relationship with the L1 security layer.
What is the Ethereum Foundation doing to build such a world
To achieve the vision of L1<>L2 relationships, the Ethereum Foundation is fully committed to the following:
· We are committed to scaling both the L1 layer and blob without sacrificing decentralization. Currently, the filling rate of blob is only around 30%, indicating significant room for expansion should the need arise, we can confidently expand the blob further.
· Particularly supporting those in the field of privacy, security, and trustlessness that have or wish to deepen their L2 integration.
· Led by Josh Rudolf, the Platform team is focused on improving the overall performance of the Ethereum platform and serving as an interface between L2 and the core protocol roadmap.
· Enhance L1 liquidity to make it easier for L2 to access liquidity (faster finality, withdrawals, and deposits).
· Work closely with L2 teams, understand their needs and prioritize them in the protocol, while clearly defining the relationship between L1 and L2. To ensure this relationship works effectively, we need to understand what works, what needs improvement, and collaborate. Our goal is always to articulate and reinforce the value proposition of being part of the Ethereum ecosystem.
· Invest in research and development to achieve "native Rollup" technology, where L1 can fully and trustlessly validate an L2 chain, enabling synced composability and secure interoperability.
· We collaborate closely with L2Beat and other institutions to collectively monitor and verify the security properties of L2. We must rigorously and honestly assess the characteristics of L2 and their relevance to L1 security so that users and developers can make informed decisions.
· Address a key drawback of the multi-chain ecosystem: fragmentation. We will work with the ecosystem (including chains, wallets, and infrastructure providers) to build more robust interoperability solutions to address the issues of user experience and developer platform fragmentation. With a clearer understanding of the relationship between L1 and L2, we can now tackle the narrative fragmentation of Ethereum.
We will together build a global, permissionless on-chain economic system and provide the best platform for all users.
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On March 16, 2026, in Dallas, Texas, USA, CanGu Company (New York Stock Exchange code: CANG, hereinafter referred to as "CanGu" or the "Company") today announced its unaudited financial performance for the fourth quarter and full year ended December 31, 2025. As a btc-42">bitcoin mining enterprise relying on a globally operated layout and dedicated to building an integrated energy and AI computing power platform, CanGu is actively advancing its business transformation and infrastructure development.
• Financial Performance:
Total revenue for the full year 2025 was $688.1 million, with $179.5 million in the fourth quarter.
Bitcoin mining business revenue for the full year was $675.5 million, with $172.4 million in the fourth quarter.
Full-year adjusted EBITDA was $24.5 million, while the fourth quarter was -$156.3 million.
• Mining Operations and Costs:
A total of 6,594.6 bitcoins were mined throughout the year, averaging 18.07 bitcoins per day; of which 1,718.3 bitcoins were mined in the fourth quarter, averaging 18.68 bitcoins per day.
The average mining cost for the full year (excluding miner depreciation) was $79,707 per bitcoin, and for the fourth quarter, it was $84,552;
The all-in sustaining costs were $97,272 and $106,251 per bitcoin, respectively.
As of the end of December 2025, the company has cumulatively produced 7,528.4 bitcoins since entering the bitcoin mining business.
• Strategic Progress:
The company has completed the termination of the American Depositary Receipt (ADR) program and transitioned to a direct listing on the NYSE to enhance information transparency and align with its strategic direction, with a long-term goal of expanding its investor base.
CEO Paul Yu stated: "2025 marked the company's first full year as a bitcoin mining enterprise, characterized by rapid execution and structural reshaping. We completed a comprehensive adjustment of our asset system and established a globally distributed mining network. Additionally, the company introduced a new management team, further strengthening our capabilities and competitive advantage in the digital asset and energy infrastructure space. The completion of the NYSE direct listing and USD pricing also signifies our transformation into a global AI infrastructure company."
"As we enter 2026, the company will continue to optimize its balance sheet structure and enhance operational efficiency and cost resilience through adjustments to the miner portfolio. At the same time, we are advancing our strategic transformation into an AI infrastructure provider. Leveraging EcoHash, we will utilize our capabilities in scalable computing power and energy networks to provide cost-effective AI inference solutions. The relevant site transformations and product development are progressing simultaneously, and the company is well-positioned to sustain its execution in the new phase."
The company's Chief Financial Officer, Michael Zhang, stated: "By 2025, the company is expected to achieve significant revenue growth through its scaled mining operations. Despite recording a net loss of $452.8 million from ongoing operations, mainly due to one-time transformation costs and market-driven fair value adjustments, the company, from a financial perspective, will reduce its leverage, optimize its Bitcoin reserve strategy and liquidity management, introduce new capital to strengthen its financial position, and seize investment opportunities in high-potential areas such as AI infrastructure while navigating market volatility."
The total revenue for the fourth quarter was $1.795 billion. Of this, the Bitcoin mining business contributed $1.724 billion in revenue, generating 1,718.3 Bitcoins during the quarter. Revenue from the international automobile trading business was $4.8 million.
The total operating costs and expenses for the fourth quarter amounted to $4.56 billion, primarily attributed to expenses related to the Bitcoin mining business, as well as impairment of mining machines and fair value losses on Bitcoin collateral receivables.
This includes:
· Cost of Revenue (excluding depreciation): $1.553 billion
· Cost of Revenue (depreciation): $38.1 million
· Operating Expenses: $9.9 million (including related-party expenses of $1.1 million)
· Mining Machine Impairment Loss: $81.4 million
· Fair Value Loss on Bitcoin Collateral Receivables: $171.4 million
The operating loss for the fourth quarter was $276.6 million, a significant increase from a loss of $0.7 million in the same period of 2024, primarily due to the downward trend in Bitcoin prices.
The net loss from ongoing operations was $285 million, compared to a net profit of $2.4 million in the same period last year.
The adjusted EBITDA was -$156.3 million, compared to $2.4 million in the same period last year.
The total revenue for the full year was $6.881 billion. Of this, the revenue from the Bitcoin mining business was $6.755 billion, with a total output of 6,594.6 Bitcoins for the year. Revenue from the international automobile trading business was $9.8 million.
The total annual operating costs and expenses amount to $1.1 billion.
Specifically, they include:
· Revenue Cost (excluding depreciation): $543.3 million
· Revenue Cost (depreciation): $116.6 million
· Operating Expenses: $28.9 million (including related-party expenses of $1.1 million)
· Miner Impairment Loss: $338.3 million
· Bitcoin Collateral Receivable Fair Value Change Loss: $96.5 million
The full-year operating loss is $437.1 million. The continuing operations net loss is $452.8 million, while in 2024, there was a net profit of $4.8 million.
The 2025 non-GAAP adjusted net profit is $24.5 million (compared to $5.7 million in 2024). This measure does not include share-based compensation expenses; refer to "Use of Non-GAAP Financial Measures" for details.
As of December 31, 2025, the company's key assets and liabilities are as follows:
· Cash and Cash Equivalents: $41.2 million
· Bitcoin Collateral Receivable (Non-current, related party): $663.0 million
· Miner Net Value: $248.7 million
· Long-Term Debt (related party): $557.6 million
In February 2026, the company sold 4,451 bitcoins and repaid a portion of related-party long-term debt to reduce financial leverage and optimize the asset-liability structure.
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