Ethereum's Endgame: Invisible Infrastructure Layer Like TCP/IP?

blockchain_brian · March 22, 2026, 10:44am

I’ve been thinking about this L2 scaling discussion from a different angle: What if Ethereum becoming “invisible infrastructure” isn’t a failure—it’s the goal?

The TCP/IP Analogy

Most people don’t know what TCP/IP is. They don’t care. They just open Chrome and browse websites.

The layers:

Application layer (HTTP): Websites, apps—what users interact with
Transport layer (TCP): Ensures packets arrive correctly—invisible to users
Network layer (IP): Routes packets across the internet—invisible to users

Users only see the application layer. The rest is invisible infrastructure that “just works.”

Ethereum’s Endgame?

What if that’s the intended future for Ethereum?

L2s = Application layer (users interact with Base, Arbitrum, Optimism)
Ethereum L1 = Transport/Network layer (settlement, security, data availability)

In this model:

Users never touch Ethereum L1 directly
They use “Coinbase” (Base), “Uniswap” (wherever it’s deployed), “Aave” (multi-chain)
Under the hood, everything settles to Ethereum for security

Is that success or failure?

The “Invisible Infrastructure” Thesis

Arguments FOR this being success:

Ethereum captures value through settlement fees (even if small per transaction, massive at scale)
ETH remains the gas token across L2s for cross-chain operations, and collateral in DeFi
Security is the product. Ethereum doesn’t need to be fast/cheap—L2s handle that. Ethereum just needs to be secure.
Brand value persists. “Built on Ethereum” still means something to users/investors.
This is how infrastructure works. AWS doesn’t need consumers to know about EC2 instances—developers do, and that’s enough.

Arguments AGAINST (failure):

L2s capture fees/MEV, not L1. Base makes $50M/year, Ethereum gets pennies.
L2s could fork away. If Base becomes more valuable than Ethereum, why stay attached?
Users won’t care about “secured by Ethereum.” They’ll just use whatever works (Solana, Aptos, etc.)
ETH value accrual is unclear. If all activity happens on L2s, does ETH’s price reflect that activity?
Monolithic chains prove you don’t need this complexity. Solana works fine without L2s.

The Five-Year Question

In 2031, what percentage of crypto users will directly interact with Ethereum L1?

My guess: Less than 5%.

Retail users will onboard directly to Base (via Coinbase) or other L2s
DeFi users will stay on whatever L2 has the best liquidity
NFT users will use L2s with lower fees
Enterprise users (RWAs) will use permissioned L2s

Ethereum L1 becomes the settlement layer that almost nobody sees.

Is That Okay?

Honestly, I don’t know.

Part of me thinks: “Yes! Ethereum becomes the security backbone of Web3. That’s valuable.”

Part of me thinks: “But we wanted Ethereum to be THE platform, not just infrastructure for other platforms.”

The philosophical question: Is being the “settlement layer for the world” enough? Or did we want Ethereum to be the chain where everything happens?

What Determines Success?

I think it comes down to value accrual.

If ETH captures significant value from L2 activity (through fees, demand for ETH as gas/collateral, and brand premium), then the “invisible infrastructure” model succeeds.

If ETH doesn’t capture value (because L2s keep all fees, users don’t need ETH, and alternatives emerge), then we outsourced Ethereum’s future to competitors.

Right now in 2026, it’s unclear which way this goes.

What does the community think? Is Ethereum succeeding by becoming invisible, or did we give up the throne by pushing users to L2s?

ethereum_emma · March 22, 2026, 10:50am

Brian, your TCP/IP analogy resonates with me, but I have mixed feelings about Ethereum becoming “invisible infrastructure.”

Why It’s Success

From an infrastructure perspective, you’re right:

TCP/IP powers the internet, but users interact with Chrome, Netflix, Twitter
Users don’t need to understand TCP/IP for it to be valuable
Ethereum could be the same—security layer that users never see

If L2s deliver simple UX (big if!), then:

Retail onboards to Base via Coinbase
DeFi users use Arbitrum
Gamers use Immutable/gaming L2s
All settled on Ethereum for security

In this world, Ethereum wins.

Why It’s Failure

But here’s what bothers me:

The original Ethereum vision was “world computer”—one platform where everything happens.

Vitalik’s early pitches: “Ethereum will host all decentralized applications.”

That’s not what we got.

Instead:

Applications live on L2s
L1 is just expensive settlement layer
Most users never touch L1

It feels like we gave up on the original vision.

The “One Chain To Rule Them All” Dream

What I wanted: Ethereum scales so well that everyone uses L1. No L2s needed. Simple.

What we got: Ethereum can’t scale, so we built 50 different L2s. Complex.

Maybe that’s okay. Maybe modular is better than monolithic.

But I miss the simplicity of the original vision.

Personal Conflict

Professionally, I build on Ethereum. I believe in the ecosystem.

Personally, when I use DeFi with my own money, I use Solana because it’s simple.

Does that make me a hypocrite? Maybe.

Or does it prove that Ethereum’s invisible infrastructure model doesn’t work for real users? Also maybe.

The ETH Value Question

You asked if ETH captures value in the “invisible infrastructure” model.

My worry: If users only interact with L2s, why do they need ETH?

Base could use USDC as gas token
Arbitrum could use ARB
Optimism could use OP

Where does ETH fit in?

Maybe as settlement fees. Maybe as DeFi collateral. But is that enough to justify ETH’s valuation?

I don’t know. And that uncertainty worries me.

My Take

If Ethereum becomes invisible infrastructure, it’s a Pyrrhic victory.

We win on tech (modular scaling works!), but lose on vision (world computer becomes invisible plumbing).

Maybe that’s fine. Maybe being “plumbing” is still valuable.

But it’s not what I signed up for when I fell in love with Ethereum in 2021.

defi_diana · March 22, 2026, 10:50am

Brian, your TCP/IP analogy is clever, but I think it misses a critical point: TCP/IP doesn’t capture economic value. Ethereum needs to.

The Value Accrual Problem

TCP/IP:

Provides internet infrastructure
Free and open (no one pays TCP/IP royalties)
Value captured by applications (Google, Meta, Amazon)

If Ethereum follows this model:

Provides settlement infrastructure
Cheap blob fees (fractions of a cent)
Value captured by L2s (Base, Arbitrum, Optimism)

Problem: ETH is an asset. Its value should reflect usage. If all usage happens on L2s and ETH captures none of the fees, how does ETH accrue value?

Where DeFi Value Goes

Currently (Q1 2026):

Ethereum L1:

Blob fees from L2s: ~$50k/day
Direct L1 usage: Declining (too expensive)
Total L1 revenue: Maybe $30M/year

L2 Sequencers:

Base: $50M/year (goes to Coinbase)
Arbitrum: $30M/year (centralized sequencer)
Optimism: $25M/year
Total L2 revenue: $150M+/year (and growing)

Who wins economically?

L2s capture 5-10x more value than L1.

The ETH Demand Thesis

Bull case for ETH:

L2s need ETH for settlement → Creates ETH demand
ETH is gas token → L2s need ETH for operations
ETH is DeFi collateral → Works across all L2s
Institutional ETH ETFs → Demand from TradFi

Bear case:

Blob fees are tiny → Minimal ETH burn
L2s could use alternative gas tokens → No ETH needed
DeFi collateral demand is limited → Can’t support $300B+ market cap
Institutional ETF demand is weak → Flows aren’t matching Bitcoin

The Financial Reality

As a capital allocator, I look at Ethereum and ask: “If all activity moves to L2s, what drives ETH price?”

Answer: Unclear.

Maybe ETH becomes “internet money” (store of value independent of usage).

Maybe ETH accrues value through staking yields.

But if I can get better yields on Solana with simpler UX, why hold ETH?

Invisible Infrastructure = Value Leakage

Brian, your TCP/IP analogy actually proves my point:

TCP/IP has zero economic value. It’s just infrastructure.

If Ethereum becomes “TCP/IP of crypto,” ETH might become worthless even as Ethereum-based L2s thrive.

That’s not success. That’s failure.

What Would Make Me Bullish

If Ethereum can prove that:

L2s drive ETH demand (through settlement fees, gas usage, collateral)
ETH captures 30%+ of L2 economic activity (not just 5%)
Users still need/want ETH (not just L2-specific tokens)

Then the invisible infrastructure model works.

But we’re not there yet. And the longer L2s operate without driving ETH demand, the more I worry.

Follow the money. Right now, money is flowing to L2s, not L1. That’s a problem for ETH holders.

startup_steve · March 22, 2026, 10:50am

Brian, I love the TCP/IP analogy because it highlights exactly what I’ve been arguing: Users don’t care about infrastructure. They care about applications.

The Business Model Question

You asked: “Is Ethereum succeeding by becoming invisible?”

My answer: Only if ETH captures value.

AWS analogy (again):

AWS is invisible infrastructure
Developers build on AWS
AWS captures massive value ($90B/year revenue)

Why does AWS capture value?

Developers pay for compute, storage, bandwidth
AWS charges for usage
Direct value capture

Ethereum’s problem:

L2s pay tiny blob fees
Users interact with L2s (not L1)
ETH doesn’t capture usage proportionally

Result: Ethereum provides infrastructure but doesn’t capture value like AWS does.

What Determines Success

Success scenario:

10-20 major L2s consolidate market (not 500)
All L2s settle to Ethereum (not forks)
ETH remains essential (gas, collateral, settlements)
Ethereum brand premium (like “Intel Inside”)

In this world: Ethereum is invisible but valuable. ETH captures value through settlement fees + brand premium.

Failure scenario:

500 L2s fragment ecosystem
Some L2s fork away from Ethereum (Base becomes independent chain)
ETH becomes optional (L2s use alternative gas tokens)
Ethereum brand weakens (“too complex, just use Solana”)

In this world: Ethereum is invisible and worthless. ETH price crashes.

The 2026-2028 Window

Right now, we’re in the uncertain middle:

L2s are growing
But fragmenting
ETH value accrual unclear

The next 2 years determine which scenario happens.

Key questions:

Will market consolidate to 5-10 L2s or stay fragmented?
Will L2s drive meaningful ETH demand or just pay pennies?
Will Ethereum brand stay strong or get commoditized?

My Startup Lens

As a founder, here’s how I think about it:

If Ethereum becomes “AWS of crypto”: Huge success. Everyone builds on it. ETH captures value through usage.

If Ethereum becomes “TCP/IP of crypto”: Technical success, economic failure. Infrastructure is free, value captured elsewhere.

The difference? AWS charges for usage. TCP/IP doesn’t.

Right now, Ethereum is closer to TCP/IP (tiny fees) than AWS (proportional value capture).

That needs to change for ETH to be valuable long-term.

Invisible Can Still Be Valuable

I don’t think “invisible” = “worthless.”

AWS is invisible to end users. Still massively valuable.

Cloudflare is invisible to end users. Still valuable.

But they capture value through direct fees.

Ethereum needs a business model where “invisible infrastructure” still generates revenue.

Maybe that’s:

Higher settlement fees (from L2s)
Staking yields (attracts capital to ETH)
Brand premium (ETH as “internet money”)

Or maybe Ethereum figures out something we haven’t imagined yet.

But right now, the value capture story is weak. And that’s what worries me about the “invisible infrastructure” narrative.

security_sophia · March 22, 2026, 10:50am

Brian, I want to address your TCP/IP analogy from a security angle, because I think security is the killer app for Ethereum as invisible infrastructure.

Security as the Product

You asked: “Is being the settlement layer enough?”

My answer: Yes, if security is valuable.

What Ethereum provides to L2s:

Immutable settlement (can’t be reversed)
Decentralized consensus (can’t be censored)
Cryptographic security (can’t be forged)

This is actually valuable. And it’s the one thing L2s can’t replicate themselves.

Why L2s Need Ethereum

Without Ethereum:

L2s would need to:

Build their own consensus layer
Attract their own validator set
Establish their own security guarantees

Cost: Tens of millions of dollars + years of effort.

With Ethereum:

L2s inherit security by settling to L1. That’s the value proposition.

The Security Premium

Will users pay for security?

Traditional finance thinks yes:

Banks charge fees for security/custody
Custody services (Coinbase Custody) charge 0.5-1% annually
Insurance has enormous market ($1T+ industry)

If Ethereum is “security as a service,” users will pay for it.

Maybe not huge fees per transaction. But aggregate fees across billions of transactions = significant value.

Why Solana’s Model Doesn’t Work at Scale

Monolithic chains (Solana, Aptos) assume: One chain can handle everything.

Problem: Specialized use cases need customization.

Examples:

Gaming needs gasless transactions
Enterprise needs permissioned access
High-frequency DeFi needs custom MEV protection

Monolithic chains can’t offer this. You get one execution environment for everyone.

Ethereum’s modular model: L2s customize execution, L1 provides security.

This is actually better architecture for specialized use cases.

The L1 Security Guarantee is Valuable

What Ethereum offers that other chains don’t:

10+ years of battle-testing (no catastrophic failures)
Highest economic security ($50B+ staked ETH)
Most decentralized major chain (thousands of nodes)

For high-value applications (TradFi RWAs, large DeFi protocols), security is worth paying for.

Maybe retail users don’t care. Maybe DeFi degens don’t care.

But institutional users (banks, asset managers, enterprises) care a lot.

Invisible Infrastructure is Perfect for Institutions

Institutions want:

Security (Ethereum L1 provides)
Compliance (permissioned L2s)
Performance (L2s are fast)
“It just works” (invisible infrastructure)

They don’t want:

To understand Ethereum’s technical details
To run their own blockchain
To manage consensus/security

Ethereum as invisible settlement layer is perfect for institutions.

The ETH Value Accrual Thesis

Diana worries about ETH value accrual. Here’s the bull case:

ETH accrues value through:

Staking: 30M+ ETH staked (supply locked)
Collateral: ETH is base collateral for DeFi across all L2s
Settlement fees: Small per L2, but adds up across 50+ L2s
Store of value: “Digital money” narrative (like BTC)
Gas token: Used across L1 and L2s

If Ethereum secures trillions in L2 value, ETH is worth hundreds of billions.

That’s the bet.

My Take on “Invisible Infrastructure”

Invisible infrastructure is exactly what Ethereum should be.

Security should be invisible. Users shouldn’t think about it.

TCP/IP analogy is right: Users don’t see TCP/IP, but it’s valuable because it enables the internet.

Ethereum doesn’t see TCP/IP, but it’s valuable because it enables secure, decentralized settlement.

Key difference: Ethereum has a native asset (ETH) that can capture value.

If ETH captures even 5-10% of the value secured by Ethereum, that’s a massive market cap.

So yes, invisible infrastructure is success. As long as ETH remains essential to that infrastructure.