Ethereum’s Layer 2 Lockup: Over $25 Billion in Assets Stuck Amid Interoperability Challenges

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As of April 2025, Ethereum’s Layer 2 ecosystems, including rollups and alt-layer platforms, have locked over $25 billion in assets. These funds, primarily allocated for liquidity and governance, face significant hurdles such as interoperability issues, trust deficits, and connectivity barriers, limiting their ability to enhance network security or generate additional yields. Despite advancements in transaction speed by networks like Arbitrum, Optimism, and zkSync, the trapped capital highlights unresolved challenges in Ethereum’s scaling solutions.

Over $25 Billion in Assets Trapped on Ethereum’s L2 Platforms

As of April 2025, more than $25 billion in assets are locked across Ethereum’s Layer 2 platforms, rollups, and alt-layer ecosystems. These funds, primarily used for liquidity or governance, face interoperability challenges, trust issues, and connectivity problems, preventing them from contributing to broader network security or generating additional yields. Networks like Arbitrum, Optimism, and zksync have enhanced transaction speed and cost but compromised composability across chains.

Ethereum Shorts Liquidated Amid Price Surge

Ethereum shorts saw $42.33 million in liquidations as the price surged. Over the last 24 hours, 2,086 traders were liquidated for a combined $258.34 million in losses, with Bybit’s ETH/USDT market hit the hardest for $2.65 million. In the 12-hour window, Ethereum made up $42.33 million of the $126.18 million in total liquidations, mostly from short positions being closed out. Bitcoin liquidations trailed at $33.24 million, with other assets combined for under $12 million. On average, over 76% of liquidations were long positions across major assets.

Matter Labs Sued by BANKEX Over Alleged Theft of Plasma Technology

Matter Labs, the creators of the Ethereum Layer-2 solution ZKsync, is being sued by BANKEX for alleged intellectual property theft involving early Plasma technology. BANKEX, a now-defunct blockchain firm, claims that former employees Alexandr Vlasov and Petr Korolev misappropriated proprietary code to build Matter Labs while still employed at BANKEX. The complaint, filed in the New York State Supreme Court, alleges that the developers secretly diverted company resources and covertly stored codebases to transfer BANKEX’s technology to Matter Labs. Vitalik Buterin, co-founder of Ethereum, initially commissioned BANKEX in 2017 to help build Plasma, a framework for scaling Ethereum.

Coinbase CLO Shares Update on Ethereum 2.0 Probe by SEC

Paul Grewal, Coinbase Global Inc.’s Chief Legal Officer, appeared on a show to discuss the Freedom of Information Act case with the SEC involving Ethereum 2.0. The Coinbase legal team sued the SEC last year for obstructing FOIA requests. After several legal battles, a federal judge ruled that the documents should be released to the crypto exchange. The Coinbase executive revealed that the firm was able to obtain more details from the agency in the ongoing FOIA suit.