Gas fees are the computational cost to execute operations. During network congestion, fees spike unpredictably.

• A simple token swap can cost $50+ during peak demand.
• Complex DeFi interactions like yield harvesting become economically unviable.
• High fees exclude small users and micro-transactions, centralizing access to wealthier participants.

Throughput limitations of ~15-45 transactions per second cause delays and failed transactions.

• Bots front-run user transactions during popular NFT mints.
• Time-sensitive arbitrage opportunities are often missed.
• User experience degrades as transaction confirmation times extend from seconds to minutes or hours.

The block gas limit caps the total computation per block, creating a scarce resource.

• Complex smart contracts (e.g., advanced DEX aggregators) consume significant gas, reducing space for other transactions.
• This artificial scarcity is the root cause of fee auctions and congestion.
• It stifles innovation in more computationally intensive dApps like on-chain games.

State growth refers to the ever-expanding data all nodes must store and process.

• The Ethereum state exceeds hundreds of gigabytes and grows continuously.
• This increases hardware requirements for node operators, threatening decentralization.
• Slower state access times further contribute to latency and higher gas costs for state-heavy operations.

The economic impracticality of small-value transfers and interactions undermines many use cases.

• Tipping content creators or paying for a single article becomes impossible when fees exceed the payment.
• Play-to-earn games cannot support frequent, small in-game asset transfers.
• This limits blockchain utility to high-value financial transactions only.

Composability—the ability for dApps to seamlessly interact—is hindered by high costs and latency.

• A multi-step DeFi strategy (e.g., flash loan, swap, deposit) becomes risky and expensive.
• Each contract call in a sequence requires separate gas and block space.
• This friction prevents the fluid, interconnected "money Lego" experience that defines DeFi's potential.

Gas fees are minimized by batching transactions on L2 and submitting a single proof to Ethereum.

• Swap fees drop from $10+ to a few cents.
• Micro-transactions and frequent rebalancing become economically viable.
• This lowers the barrier to entry for retail users and enables new financial primitives.

Instant settlement is achieved through optimistic or zero-knowledge proof systems that provide near-instant confirmation.

• Trading and arbitrage opportunities are captured faster.
• User experience rivals centralized exchanges.
• This is critical for high-frequency DeFi strategies and liquidations.

Atomic composability within a single L2 allows multiple protocol interactions in one transaction.

• Execute flash loans, swaps, and leverage positions seamlessly.
• Reduces slippage and front-running risk.
• Enables complex, multi-step DeFi strategies that are impractical on L1.

Cryptographic security is inherited from Ethereum L1, with fraud proofs or validity proofs ensuring correctness.

• User funds are secured by Ethereum's consensus.
• Withdrawals to L1 are always guaranteed.
• This provides a trust-minimized environment superior to sidechains.

Data availability is managed via calldata, blobs, or dedicated data committees, separating execution from storage.

• Enables thousands of transactions per second.
• Reduces the cost of storing transaction data.
• This scalability is essential for order-book DEXs and prediction markets.

Transaction privacy can be implemented at the application layer using zero-knowledge proofs.

• Hide trade amounts or positions from public mempools.
• Enable confidential voting or auctions.
• This protects user strategies and reduces MEV extraction risks.