TEC Rollup Report - March, 2025

A New Monthly Newsletter exploring L2 Developments and Governance hosted by the Token Engineering Commons

Layer 2 Interoperability: A Unified Future

Ethereum, the pioneering smart contract blockchain, has long grappled with scalability challenges. Its Layer 2 (L2) scaling solutions—rollups like Arbitrum, Optimism, and Base—have successfully alleviated congestion and slashed transaction costs, and boosting throughput. However, this progress has come at a price: a fragmented ecosystem of 55+ rollups, each operating as an isolated island. Users face cumbersome bridges, high costs, and delays when moving assets between these L2s, undermining Ethereum’s vision of a cohesive network. As of April 2025, the tide is turning. Interoperability between Ethereum’s L2s is no longer a distant dream but an imminent reality, with transformative upgrades slated for this year. This article explores the current state of L2 interoperability, the solutions on the horizon, and what a unified Ethereum ecosystem could mean for the future of decentralized finance (DeFi), user experience, and blockchain innovation.

The Fragmentation Dilemma

Ethereum’s rollup-centric roadmap, accelerated by the Dencun upgrade in March 2024, introduced "blobs" to reduce L2 data costs, dropping fees to mere cents. Yet, this scalability boon birthed a new challenge: fragmentation. With each rollup operating independently, liquidity is siloed, and cross-chain interactions rely on slow, expensive, and often risky bridges. For instance, transferring assets between Arbitrum and Optimism via Ethereum can take hours, and third-party bridges remain vulnerable to hacks—over $2 billion has been lost to bridge exploits since 2020. This disjointed experience has dampened ETH sentiment and price, as users and developers yearn for the seamless interoperability of Ethereum’s early days.

Mallesh Pai, senior director of research at Consensys, highlights the first step toward resolution: seamless token transfers. “In the next few months, we’ll get seamless token transfers,” he predicts, a critical milestone that, while short of full synchronous composability, meets the needs of “99.9999%” of users. But the ambition doesn’t stop there. Ecosystem leaders envision a future where L2s operate as a single, unified network, restoring Ethereum’s original promise.

The Interoperability Revolution

2025 is poised to be a watershed year for L2 interoperability, with multiple projects racing to bridge the gaps. Polygon’s AggLayer, for example, aims to connect all Ethereum L2s—and eventually all smart contract chains—mirroring how TCP/IP unified the internet. Co-founder Brendan Farmer likens it to air travel: “With the AggLayer, it’s like you’re able to bring your suitcase,” he explains, contrasting it with current solutions where users must rely on solvers to recreate assets at their destination. The AggLayer’s “unified liquidity” approach could eliminate bridge-related friction, enabling instant, trustless asset movement.

Meanwhile, Across co-founder Hart Lambur emphasizes speed: “When chains can interact in two seconds or less, the vision of a unified Ethereum comes to life.” His protocol, alongside others like Optimism’s Superchain and Arbitrum’s Orbit, is pushing for standardized, fast cross-chain messaging. A recent call among L2 leaders—including Base, Arbitrum, and Optimism—solidified a commitment to “based” or “native” rollups, which leverage Ethereum’s L1 more extensively for sequencing and finality. This shift promises real-time composability, where applications across L2s can interact instantaneously, reviving DeFi’s “money legos” era.

Single-slot finality (SSF), another key upgrade, could slash confirmation times from 15 minutes to 12 seconds. “SSF is a big blocker for rollup interoperability,” notes Emmanuel Awosika of Collective 2077. By reducing the risk window for solvers handling unconfirmed transactions, SSF could turbocharge cross-L2 efficiency. Combined with shared sequencing—where L2s align their transaction ordering via Ethereum’s validators—the ecosystem could achieve synchronous composability, making it feel like “one Ethereum” again.

New Insights: Beyond Technical Fixes

While technical solutions dominate the conversation, interoperability’s implications extend far beyond code. For users, a unified L2 ecosystem could mean a radically simplified experience—no more juggling wallets, bridges, or gas tokens. Imagine sending a token from Base to Arbitrum as easily as emailing a friend, with fees under a penny and near-instant settlement. This could onboard millions of new users, especially in emerging markets where cost and complexity are barriers.

For developers, interoperability unlocks a renaissance of innovation. Today, building on one L2 often means forsaking users on others. A composable ecosystem would let developers deploy apps that tap liquidity and functionality across all L2s, fostering competition and creativity. Picture a DeFi protocol that pools liquidity from Polygon, Optimism, and zkSync in real time, or an NFT marketplace spanning every rollup without clunky workarounds.

Economically, Ethereum’s L2 ecosystem impacts the mainnet’s revenue. The Dencun upgrade reduced L1 gas fees, which in turn decreased fee revenue for Ethereum validators. Future upgrades, such as Pectra, expected on May 7, 2025, per Ethereum Foundation announcements, will increase blob capacity, potentially supporting more L2 activity while balancing L1 economics.

The Road Ahead: Challenges and Opportunities

Despite the optimism, hurdles remain. Converting existing L2s to based or native rollups will take time, and new standards must emerge for full interoperability. Data availability, a perennial Ethereum bottleneck, looms large—native rollups’ state witnesses could strain blob capacity, though planned increases (doubling in the next fork, then possibly 2x-4x in Fusaka) offer relief. Security is another concern; while based rollups inherit Ethereum’s robustness, poorly implemented bridges or messaging protocols could invite exploits.

Looking further, interoperability could redefine Ethereum’s role in the broader blockchain landscape. If Polygon’s AggLayer succeeds in connecting non-Ethereum chains, Ethereum might evolve into a universal settlement layer, bridging Solana, Binance Smart Chain, and beyond. This would position Ethereum as the backbone of a multichain future, amplifying its influence and utility.

A Unified Ethereum Reborn

Ethereum’s L2 interoperability roadmap is more than a technical fix—it’s a reclamation of its founding ethos. By mid-2025, with solutions like AggLayer, Superchain, and SSF rolling out, users could experience an Ethereum that feels whole again: fast, cheap, and seamless. This evolution promises not just to heal fragmentation but to propel Ethereum into a new era of dominance, where scalability and unity coexist.

Layer 2 March Highlights

  • Tether's USDT0 Expansion: Tether has launched its cross-chain dollar stablecoin, USDT0, natively on both Optimism and Unichain. This expansion aims to improve stablecoin accessibility and interoperability within the broader Superchain ecosystem, facilitating seamless asset transfers and enhancing user experience.

  • Launch of Onchain Labs: On March 17, 2025, Offchain Labs, in partnership with the Arbitrum Foundation, announced the launch of Onchain Labs. This incubator program is designed to support innovative and experimental decentralized applications (DApps) within the Arbitrum ecosystem, providing product and go-to-market support to developers.

  • Wyoming's Stablecoin Testing on Base & More: In March 2025, the state of Wyoming initiated testing of its state-backed stablecoin, WYST, on multiple blockchains, including Base. This move signifies a notable step as WYST is among the first stablecoins originating from a U.S. state government.

  • Exploration of COIN Tokenization: Coinbase, the incubator of Base, is in the exploratory phase of bringing its stock, COIN, onto the Base Layer 2 network. This initiative could bridge traditional securities with blockchain technology, potentially positioning COIN as a central asset within the Base ecosystem.

  • Celo's Integration into the Superchain: Celo has transitioned from a standalone Layer 1 blockchain to an Ethereum Layer 2 by adopting the OP Stack. This integration brings Celo's extensive user base and its focus on real-world applications, such as stablecoins and public goods infrastructure, into closer alignment with Ethereum's ecosystem.

Layer 2 Governance Updates

Optimism Governance

Passed Proposals
Upgrade 12: " L1 Pectra Readiness” (Passed March 4, 2025)
 Pectra is an upgrade to the Ethereum protocol composed of Prague (Execution Layer) and Electra (Consensus Layer) which will activate soon on testnets and mainnet. It contains consensus changes which, by default, would cause all OP Stack chains to halt. Upgrade 12 is a maintenance upgrade which consists of changes to the node software, OP Protocol specs, and the L1 Fault Proofs Smart-Contract System(s).

“Upgrade 13: OPCM & Incident Response” (Passed March 22, 2025)
 This propsal outlined a more robust incident response process and technical improvements to contracts and their managament. It provides a simplified process, and allows smaller and more frequent upgrades to occur, and enables more flexible and less disruptive ways to respond to potential incidents in the OP Stack fault-proof system.  

Arbitrum Governance

Passed Proposals
"Adopt Timeboost + Nova Fee Sweep" (Passed March 26, 2025)
This proposal aimed to enhance transaction ordering with Timeboost (a modified sequencing policy) and improve treasury management by sweeping fees from Arbitrum Nova to the DAO treasury. It passed with significant support.

Failed Proposals
"Arbitrum Onboarding V2: A Governance Bootcamp" (Quorum Fail, March 10, 2025)
An update to onboarding processes for new users and developers, streamlining access to Arbitrum’s governance ecosystem.

Active & Upcoming Proposals
"Arbitrum Audit Program" (Active, Closes on 4/4/25)
A proposal to run an on-going open application to support projects in the ecosystem that require a subsidy to audit their project. A list of auditors will be approved, and will be charged with increasing smart-contract security on Arbitrum.

Polygon Governance

Pending & Upcoming Polygon Improvement Proposals (PIP’s)
"PIP-57: Add migrateTo() in the POL Migration Contract" (Pending, Published Jan.15, 2025)
This proposal introduces a migrateTo() function in the POL Migration contract, allowing users to migrate $MATIC to $POL while specifying a recipient address different from their own.

"PIP-58: Increase BaseFeeChangeDenominator to 64” (Pending, Published Feb. 7, 2025)
This proposal seeks to increase the BaseFeeChangeDenominator from 16 to 64 on the Polygon POS Network, reducing the volatility of gas prices during periods of high demand.

"PIP-59: Floor Gas Price (25Gwei) from Priority to Base Fee” (Pending, Published Feb. 10, 2025)
This proposal seeks to move the current 25 Gwei gas price from the Priority Fee to the Base Fee, enabling wallets & dApps to easily query and adapt to protocol changes.

"PIP-60: Increase Gas Limit to 36M" (Pending, Published Feb. 10, 2025)
This proposal will increase Maximum Gas from 30M to 36M, allowing for more transactions to be included within a single block.

Other Notable L2 Governance Updates

zkSync
Passed: “[ZIP-8]: Upgrade Chain Creation Params” - proposes upgrading the chain creation parameters for new chains to enable new chain creation after [ZIP-6] as well as setting the new genesisUpgrade contract.

StarkNet
Passed: "Staking on Starknet V2” - proposal for a planned upgrade to Starknet Staking V2, aimed at enhancing network security and decentralization by verifying Validator reliability and improving Validator staking incentives.

Celo
Passed: "Celo L2’s Security Council” (March 17, 2025) – As a new L2 on Ethereum, cLabs is requesting input from the Celo Community on the creation and development of Celo’s L2 Security Council.

Scroll
Passed: "Scroll DAO Constitution" (March 26, 2025) – this proposal seeks to ratify the Scroll DAO constitution that sets out the key governance principles, guidelines, and processes serving as a foundational document for Scroll L2.

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