Curve Finance Community Debates Proposal To Halt Layer 2 Development Amid Low Returns And Resource Concerns

In Brief

Curve Finance has sparked debate with a community proposal to halt further Layer 2 development due to low returns and high resource demands, reflecting a broader industry shift toward refocusing on Ethereum’s Layer 1.

Decentralized exchange (DEX) and automated market maker Curve Finance introduced a proposal titled “Cut all further or ongoing Layer 2 developments,” accompanied by a poll presenting three options: Cut Layer 2 development, Don’t cut Layer 2 development, and Reduce Layer 2 development and seeking the community’s response

The platform states that development efforts on Layer 2 networks are demanding time from skilled developers, with each chain requiring a level of attention comparable to Ethereum, yet providing minimal returns in exchange. The proposal argues that discontinuing such development would allow Curve Finance to redirect focus toward more productive areas. The initiative to expand Curve onto Layer 2 networks has already been undertaken, but available data reportedly indicates limited benefits—generating approximately $1,500 per day across all Layer 2 networks—while requiring substantial development effort and incurring higher maintenance costs due to the quickly changing and short-lived nature of these environments. The practical implication of the proposal is that existing Layer 2 implementations would remain operational, but all Layer 2-related tasks would be removed from developers’ to-do lists.

Some individuals responding to the proposal referred to it as “radical,” prompting CurveDAO member phil_00Llama, the author of the proposal, to clarify that all existing Layer 2 deployments should continue to operate

He stated that Curve is currently deployed on 24 Layer 2 networks, collectively generating approximately $1,500 in daily revenue, which equates to an average of $62 per day per Layer 2. In contrast, Curve’s pools on the Ethereum mainnet reportedly produce around $28,000 in daily revenue even on slower days, an amount equivalent to the combined average output of approximately 450 Layer 2 deployments. The author further noted that Curve should instead concentrate its efforts on Ethereum, suggesting that initiatives such as wider adoption of crvUSD within the Ethereum ecosystem would be a more strategic direction.

Curve Finance later addressed the ongoing discussion by clarifying that this proposal did not originate from the current team actively working on the protocol. It was stated that no members of the core team support the proposal, making it unlikely that the platform will adopt the suggested course of action

However, the response acknowledged that the proposal includes data that could contribute to meaningful dialogue, and the broader community was encouraged to engage in open discussion on the matter.

Growing Industry Shift: Developers Reassess Layer 2 Focus In Favor Of Ethereum Layer 1 Prioritization

Curve Finance functions as a DEX and automated market maker, with its primary operations based on the Ethereum blockchain as well as on Ethereum-compatible sidechains and Layer 2 solutions. The platform is designed to facilitate efficient trading between stablecoins and more volatile digital assets. In addition to its trading infrastructure, Curve has launched its own over-collateralized US dollar-pegged stablecoin known as crvUSD, which utilizes a distinctive approach to liquidation. The protocol provides application programming interfaces (APIs) that offer access to data related to various Curve liquidity pools and allows for the permissionless creation of new liquidity pools by users.

The proposal follows an earlier stance taken by Aave co-founder Marc Zeller, who suggested discontinuing Aave’s deployment on the Bitcoin Layer 2 network BOB. This reflects a broader trend within the cryptocurrency space, where a growing number of developers and stakeholders are beginning to reevaluate the heavy emphasis placed on Layer 2 expansion. Instead, there is a noticeable shift toward reconsidering and potentially re-prioritizing efforts on Ethereum’s primary Layer 1 infrastructure, highlighting concerns over resource allocation and long-term strategic focus.