Ethereum’s scalability challenge has led to the rapid rise of Layer 2 (L2) networks—solutions designed to reduce congestion and lower transaction fees while maintaining the security of the Ethereum mainnet. Among these, Optimism stands out not just for its technology but also for its unique economic model that rewards ecosystem contributors. Recently, I submitted an application for RetroPGF 3 (Retrospective Public Goods Funding), a groundbreaking initiative by Optimism that retroactively rewards teams and individuals who’ve contributed to the public good of the blockchain ecosystem.
This is the second time our platform has participated. Last round, we received 6,355 OP tokens—worth approximately 450,000 TWD—which were distributed proportionally among our members as a thank-you for their influence and support. The upcoming RetroPGF round has triple the budget of the previous one, meaning this application could significantly impact how much回馈 (return) our community receives. Results are expected in January 2025.
Your continued subscription and sharing of our content directly strengthen our eligibility and visibility. And if you have friends who prefer English, we now offer an English version—perfect for global sharing.
👉 Discover how blockchain projects earn real revenue and who benefits the most.
Why Optimism Is My Go-To Ethereum Layer 2
I’ve long considered Optimism my preferred Ethereum Layer 2 solution—not just because of its technical efficiency, but because of its vision. By using Optimism, users indirectly support a circular economy where value flows back into public goods through mechanisms like RetroPGF. This creates a self-sustaining ecosystem that funds developers, educators, and builders who contribute to the long-term health of Web3.
In this deep dive, we’re joined by Dr. Chen Changwu, Chief Scientist at imToken, to explore the financial engine behind Ethereum Layer 2 networks. What surprised us most? Dr. Chen opened the conversation with a bold hypothesis: Coinbase’s development of Base, its own Layer 2 network, might be a strategic move toward launching a fully decentralized exchange (DEX).
Let’s unpack that—and more.
Could Coinbase Be Building a Decentralized Exchange in Disguise?
At first glance, Base appears to be just another Ethereum L2—fast, low-cost, and backed by one of the largest crypto exchanges in the world. But Dr. Chen suggests there’s more beneath the surface. By launching Base, Coinbase gains control over a critical piece of infrastructure: transaction ordering.
In traditional DEXs, trades are executed on-chain, and order flow is transparent. But whoever controls the sequencing of transactions can influence trade execution—especially in high-frequency scenarios. If Coinbase uses Base to route its own order flow before it hits public markets, it could gain a competitive edge in trade execution speed and cost.
But here’s the twist: if they open up this infrastructure to third-party developers and gradually decentralize sequencer control, Base could evolve into a true decentralized exchange platform—built on a chain they originally controlled.
This isn’t speculation without precedent. Projects like Optimism and Arbitrum have already shown how L2s can generate revenue through transaction fees and MEV (Maximal Extractable Value). The key question is: Who captures that value—and how fairly?
How Do Ethereum Layer 2 Networks Make Money?
Unlike Layer 1 blockchains that rely on miners or validators for consensus, most Ethereum L2s operate with centralized sequencers in their early stages. These sequencers batch transactions off-chain and post them to Ethereum later.
Primary Revenue Streams for L2s:
- Transaction Fees: Users pay small fees to execute transactions. While lower than Ethereum mainnet, these add up at scale.
- MEV (Maximal Extractable Value): This refers to profits gained by reordering, inserting, or censoring transactions within a block.
- Token Appreciation: As usage grows, native tokens like OP or ARB may increase in value, benefiting early contributors and treasury holders.
Of these, MEV is the most controversial—and potentially the most lucrative.
What Is MEV—and Does It Hurt Users?
MEV isn’t inherently evil. It’s simply a measure of value that can be extracted from block production beyond standard rewards. Common examples include:
- Arbitrage bots buying low on one DEX and selling high on another.
- Liquidation bots seizing undercollateralized loans in DeFi protocols.
- Front-running bots detecting large trades and buying ahead to profit from price movement.
While some forms of MEV improve market efficiency (like arbitrage), others—like front-running—clearly harm ordinary users by increasing slippage and execution costs.
The real issue? Centralized sequencers can capture all MEV profits, leaving no benefit for users or token holders. That’s why newer L2 designs are exploring ways to share MEV revenue—either with users, stakers, or public goods funding programs like RetroPGF.
👉 See how next-gen blockchains are turning MEV into community rewards instead of hidden profits.
Will We Soon Be Overwhelmed by Too Many Layer 2 Choices?
With Base, Optimism, Arbitrum, zkSync, Starknet, Linea, Mantle, and more—all vying for developer attention—the ecosystem risks fragmentation. Will users need to manage dozens of wallets across incompatible chains?
Dr. Chen believes consolidation is inevitable. Just as the early internet saw hundreds of competing platforms before standards emerged (like HTTP and TCP/IP), blockchain will likely converge around a few dominant L2 frameworks. Interoperability tools like LayerZero and Wormhole will help, but user experience—simplicity, speed, cost—will ultimately decide winners.
And here’s a powerful trend: L2s aren’t just scaling Ethereum—they’re becoming platforms for innovation in governance, revenue sharing, and decentralized finance.
Frequently Asked Questions
Q: What is RetroPGF and how does it work?
A: RetroPGF (Retrospective Public Goods Funding) is a program by Optimism that rewards past contributions to the blockchain ecosystem. Instead of applying for grants upfront, contributors submit evidence of their work after the fact—and are compensated based on impact.
Q: Can MEV be eliminated entirely?
A: No—but it can be mitigated. Techniques like MEV-aware routing (e.g., Flashbots’ SUAVE) aim to make MEV extraction fairer and more transparent by auctioning ordering rights or redistributing profits.
Q: Is Base really decentralized?
A: Not yet. Currently, Coinbase operates the sequencer for Base. However, their roadmap includes gradual decentralization, which could eventually lead to full community governance.
Q: How can I benefit from Layer 2 growth?
A: Beyond using L2s for cheaper transactions, consider participating in ecosystems through staking, providing liquidity, or contributing to governance. Some networks also offer retroactive airdrops to active users.
Q: Does every project need its own L2?
A: Probably not. While “app-specific” rollups make sense for high-throughput dApps (like gaming or social networks), most projects will thrive on shared L2s that offer security, liquidity, and network effects.
👉 Learn how to identify which Layer 2 projects are building real value vs. hype.
Final Thoughts: The Future Is Built on Shared Value
The rise of Ethereum Layer 2s isn’t just about faster transactions—it’s about reimagining how value flows in decentralized systems. From Coinbase’s strategic play with Base to Optimism’s commitment to funding public goods, we’re seeing new models emerge where success isn’t zero-sum.
As users, developers, and investors, our role is clear: support ecosystems that prioritize transparency, fairness, and long-term sustainability. Whether it’s through participation in RetroPGF, choosing L2s with fair MEV policies, or simply staying informed—every action shapes the future of Web3.
The infrastructure is being built. The question is: what kind of digital economy do we want to live in?
Core Keywords: Ethereum Layer 2, MEV revenue, decentralized exchange, RetroPGF, Optimism, Base chain, blockchain scalability, public goods funding