Based Rollups could offer a solution to the problem of Ethereum’s layer-2 networks withdrawing liquidity and revenue from the base layer of the blockchain.

Based Rollups is a layer-2 scaling solution that uses layer-1 validators to process transactions instead of their own sequencers. “It could directly impact incentive structures by making a fundamental change to how Ethereum makes money,” Cinneamhain Ventures partner Adam Cochran said in a Sept. 10 X post.

This could increase Ether demand a hundredfold in the long run, he added. Validators will have the option to commit Based Rollups and earn additional rewards. This economic impact could result in an increase in ETH staking value and potentially higher returns.

Cochran stated that Based Rollups will also be interoperable with other rollups, which will increase access to liquidity, cross-chain transaction resolution and gas demand.

Based Rollups align incentives between layer-2s and layer-1 validators, which can make it possible to maintain high staking returns while ensuring zero issuance inflation in the long term, he said.

Cochran added that for the first time, Ether staking incentives will be determined by overall Ethereum Virtual Machine (EVM) usage rather than ETH issuance rate. Based Rollups are not a new concept and were described in 2023 by Ethereum developer Justin Drake as “particularly economically compatible with their base layer.”

After the Dencun upgrade in April, the Ethereum issuance rate became inflationary. This upgrade greatly reduced tier-2 fees, resulting in a decrease in overall gas (ETH) usage.

This reduced the amount of ETH fees burned, which led to a decline in network revenues and an inflationary issuance process.

Ethereum community member Ryan Berckmans spoke out against the latest concerns about Ethereum in a post on the X platform on September 10, saying:

“If total fees stay low forever, the entire world could use Ethereum for almost free, further accelerating the adoption of ETH as money.”

Berckmans noted that regardless of whether fees are high or low, Ethereum’s continued growth presents an optimistic picture for ETH. This is in line with the goal of fundamentally changing the economics of the network to benefit ETH holders through Based Rollups.

Ethereum developer Eric Connor also said in a post on the X platform on September 10: “Ethereum is in the best position it has ever been, but overall sentiment is at its worst ever.”

“The crypto world will be won not on Twitter, but by providing the world with a decentralized, global financial consensus layer. ETH will gain a natural monetary premium,” Connor added.