Companies May Be Over-Layering: Expert Warns of Layer 2 Network Misuse

Companies May Not Need Their Own L2 Networks, Expert Warns In a crowded market, launching an Ethereum layer 2 network may not be the best option for most companies, according to Paul Brody, Global Blockchain Leader at EY. Speaking in September 2025, Brody emphasized that only those with significant transaction volume and customers unable to connect directly to Ethereum would benefit from creating their own L2. Brody's statement comes as several high-profile companies, including Robinhood, have announced plans to launch their own layer 2 networks. However, the expert warns that this trend may be misguided, citing the already saturated market with over 150 existing L2 networks. "Most of them shouldn't bother," Brody said. The attractions for launching an Ethereum layer 2 network are significant, especially when compared to building a foundation layer blockchain from scratch. Layer 1 networks must compete in an intensely competitive and crowded market, while L2 networks can leverage the infrastructure and security of Ethereum. However, this also means that companies may face intense competition and high barriers to entry. Brody noted that only companies with significant transaction volume and customers unable to connect directly to Ethereum would benefit from creating their own L2. "If you're a company that can aggregate significant transaction volume into the network, and your customers can't make their own direct connection to Ethereum, then maybe it makes sense," he said. The market for layer 2 networks has grown rapidly in recent years, with companies seeking to reduce gas fees and increase scalability on the Ethereum blockchain. However, this growth has also led to concerns about decentralization and the concentration of power among a few large players. While some experts argue that creating their own L2 network can provide companies with greater control and customization options, Brody warns that this approach may not be worth the costs and complexities involved. "It's not just about building a layer 2 network; it's about building a whole ecosystem around it," he said. As the market continues to evolve, companies will need to carefully weigh the benefits and drawbacks of launching their own L2 networks. With over 150 existing networks already in operation, the competition for users and developers is fierce. Companies may need to consider alternative approaches, such as partnering with existing L2 providers or exploring other blockchain solutions. In conclusion, while creating an Ethereum layer 2 network may seem like a attractive option for companies, it's not necessarily the best choice for most businesses. As Brody warned, "Most of them shouldn't bother." *Reporting by Coindesk.*