Galaxy’s Alex Thorn Slams Ethereum L2s as ‘ETH Extractors’—Fee Retention Sparks Backlash
Ethereum's layer-2 solutions are under fire—again. Galaxy Digital’s Alex Thorn just dropped a bombshell, calling L2s 'ETH extractive' as fee retention strategies ruffle feathers across DeFi.
The Fee Game: Who Really Wins?
While L2s promise scalability, Thorn’s critique cuts deep: are these rollups siphoning value from Ethereum’s base layer? The numbers don’t lie—millions in sequencer fees are getting pocketed, not redistributed. TradFi would blush at the lack of revenue-sharing.
The Irony of Decentralization
Optimistic rollups? More like optimistic cash grabs. Zero-knowledge proofs? More like zero-transparency profit engines. The ecosystem’s buzzing—whether in agreement or outrage—as Thorn’s take goes viral.
One thing’s clear: in crypto, even scaling solutions can’t escape the golden rule of extraction. Wall Street would be proud—just swap ‘ETH’ for ‘shareholder value.’
Post EIP-4844
Pointing to post-EIP-4844 dynamics, Thorn noted that aggregate L2 blob confirmation costs and L1 gas spend have hovered around $10,000 per day, while L2s earn from $100,000 to $400,000 daily in user fees.
As a result, L2 earnings leave “a nice margin even including running the chain.” Blobs are dedicated spaces offering data storage used by layer-2 blockchains built on top of Ethereum.
He also contrasted payments from Base to the Optimism Collective, since Base uses the OP Stack, versus payments from L2s to Ethereum. Over the last 180 days, Base paid $4.4 million to OP, while all L2s combined paid $3.05 million to Ethereum L1 for blobs and gas.
Thorn further claimed Coinbase made $14.9 million in Base fee revenue in Q2, with $443,000 in L1 data costs and $2.16 million paid to OP, saying “OP is literally making 4.8x more off Base than Ethereum is.”
The critique culminated in a broader alignment question, to which Thorn responded:
Long-running debate
Base graduated to Stage 1 in April on data aggregator L2Beat, an intermediate decentralization tier envisioned by Ethereum co-founder Vitalik Buterin.
Stage 1 indicates improved fault-proofs and governance safeguards, while Stage 2 is defined by an L2 having no group of actors that can post a state root other than the output of the code, even unanimously.
The L2 powered by Coinbase was among other chains thattheir security measures to prevent ways to block messages to the mainnet other than compromising at least 75% of the network’s security council.
Thorn’s argument revives aover how much economic value L2s should return to Ethereum versus to their operators or upstream collectives.
The post-4844 cost structure lowered L2 data costs by introducing blobs, but the balance between user fees retained by L2s and L1 spend and staking remains contested.
