Why Layer 2s are the TCP of Blockchain's IP

Monolithic scaling is a dead end. Single chains that bundle execution, consensus, and data cannot scale all three simultaneously; this is the scalability trilemma. Ethereum's rollup-centric roadmap is the formal admission of this reality.

Layer 2s are the TCP of blockchain's IP. Ethereum L1 provides settlement and data availability (IP), while rollups like Arbitrum and Optimism handle execution (TCP). This separation creates a specialized, competitive execution layer.

The modular stack creates new bottlenecks. Data availability shifts to layers like Celestia and EigenDA, while shared sequencers like Espresso and Astria emerge. This creates a fragmented liquidity landscape that intents and shared infrastructure must solve.

Evidence: Over 90% of Ethereum's transaction volume now occurs on its L2s. The Arbitrum, Optimism, and Base ecosystems collectively process more than 10x the daily transactions of Ethereum L1, proving the demand for specialized execution.

Execution is a service because blockchains are computationally bound. Optimistic and ZK rollups like Arbitrum and zkSync sell cheap, fast computation, outsourcing the hard work from the base layer.

Settlement is a state because finality is the only non-fungible asset. Ethereum L1 provides the canonical data availability and dispute resolution layer, the single source of truth for all L2 states.

This mirrors TCP/IP. Ethereum is the IP layer—the dumb, reliable packet router. Rollups are the TCP layer—specialized protocols managing connections and throughput atop the simple network.

Evidence: Over 90% of Ethereum's total value secured now resides on L2s. The L1 processes ~15 TPS, while Arbitrum and Base collectively process over 100 TPS, proving the specialization thesis.

Rollups are TCP windows. TCP's sliding window protocol batches data to maximize throughput without overwhelming the receiver. Rollups like Arbitrum and Optimism batch transactions to maximize throughput without overwhelming Ethereum. The core innovation is the same: manage flow by grouping work.

The settlement layer is IP. Ethereum L1 provides the irreducible trust layer, akin to IP's role in packet delivery. It guarantees finality and data availability, just as IP guarantees packet routing. The L1 does not process every transaction; it secures the batched state commitments.

Batch size is the congestion signal. In TCP, window size adapts to network load. In rollups, batch submission frequency and size adapt to L1 gas prices. Protocols like Base and zkSync dynamically adjust their sequencing to optimize for cost versus latency, mirroring TCP's adaptive algorithms.

Evidence: Arbitrum Nitro processes over 100k TPS internally but submits a proof batch to Ethereum approximately every 20 minutes. This is the exact architectural separation of TCP (high-throughput data transfer) from IP (reliable, ordered delivery). The bottleneck shifts from execution to secure data posting.

Monolithic chains are AOL. They attempt to bundle execution, data availability, and consensus into one closed system, creating a scaling ceiling. This is the same architectural dead-end that proprietary online services hit before the internet's protocol stack won.

Ethereum L1 is the IP layer. Its role is secure consensus and data availability, not execution. Forcing all computation onto a single global chain is like running every app's logic directly on a router. The throughput limit is a feature, not a bug, of this settlement function.

Rollups are the TCP layer. They provide ordered, reliable execution atop the base settlement (IP) layer. Arbitrum and Optimism handle state updates, while Ethereum L1 secures the final ledger. This separation is why rollups scale without fracturing liquidity or security.

The modular counter-argument fails on first principles. Proponents claim monolithic designs like Solana or Aptos are 'simpler'. This ignores that complexity doesn't vanish; it shifts. Monoliths internalize all scaling complexity, leading to unpredictable performance cliffs under load, as seen in Solana's past outages.

Evidence: The market votes for specialization. Over 90% of Ethereum's transaction volume now occurs on its L2s. Users and developers choose Arbitrum, Base, and Starknet for execution because they offer better UX, while still settling on Ethereum for ultimate security. The protocol stack is winning.

Blockchain's TCP/IP layer is the L2 scaling stack. Ethereum L1 is the settlement layer, analogous to the internet's IP protocol. L2s like Arbitrum, Optimism, and zkSync are the TCP layer, providing reliable, ordered transaction execution and data availability. This separation creates a clean abstraction for application developers.

The 'HTTP' layer emerges on top of this transport. Protocols like UniswapX, Across, and Socket abstract cross-chain complexity into simple intents. Users sign a desired outcome, and a network of solvers competes to fulfill it. This shifts the burden from the user to the infrastructure, mirroring how HTTP abstracts TCP/IP packet routing.

The UX protocol stack inverts traditional blockchain design. Instead of applications managing gas, bridging, and liquidity, intent-based standards delegate these tasks. This creates a user-centric execution layer where the network's job is to satisfy user commands, not just process transactions. The competition moves from L1 block space to solver networks.

Evidence: Arbitrum processes over 1 million transactions daily, providing the reliable throughput needed for this new application layer. UniswapX has settled billions in volume by abstracting MEV and cross-chain swaps into a single signature.