Offchain Labs, the developers of Ethereum's layer-2 network Arbitrum, have announced a new partnership program with the Arbitrum Foundation. Titled Onchain Labs, the program aims to rapidly expand Arbitrum's decentralized application (DApp) offerings, focusing on supporting innovative and experimental projects.
Goals and Objectives of Onchain Labs
Offchain Labs' new initiative is designed to accelerate the development of Arbitrum’s application layer. Support will primarily be in the form of product and market entry advice, no engineering or operational resources will be provided. Additionally, the company noted that its venture arm Tandem does not guarantee any tokens purchase of these projects in the public markets.
Challenges with Layer 2 Growth
The growth of layer 2 networks has resulted in the fracturing of the Ethereum ecosystem as different DApps operate on independent L2s, which may lead to interoperability challenges, thus affecting infrastructure.
Impact on Ethereum Ecosystem
Lower-cost layer 2 networks like Base and Arbitrum put pressure on Ethereum's market cap. This has resulted in a reduced ETH price forecast by Standard Chartered for 2025. Geoff Kendrick, the bank's head of digital asset research, highlights that cheaper L2s undercut ETH's revenue.
The Onchain Labs initiative opens up new horizons for Arbitrum, focusing on supporting fair project launches. However, the growth of layer 2 networks poses challenges for Ethereum, requiring a balance between technological advancement and ecosystem stability.
