Curve Considers Pivot Away From Ethereum Layer 2 Networks After Poor Yield

A governance proposal within Curve Finance is causing a stir in the DeFi community, as one contributor calls for a pause in the protocol’s expansion into Ethereum Layer 2 networks.

On July 31, a CurveDAO member submitted a proposal arguing that Curve’s Layer 2 deployments generate little revenue and divert resources from more valuable initiatives like its native stablecoin, crvUSD. Layer 2 networks are designed to improve Ethereum’s scalability and have become increasingly popular over the years.

Curve Earns More From Ethereum in a Day Than 450 L2s Combined

The proposal highlighted Curve’s disappointing revenue generation across 24 Layer 2 networks. According to the proposal, the protocol earns approximately $1,500 daily across all these Layer 2 chains, equating to just $62 per network.

Considering this, the proposal stated that such returns do not justify the engineering costs and long-term upkeep required to support these fast-moving blockchain networks.

“Bringing Curve to L2s has been tried now, but the stats speak for themselves. Very little returns while consuming lots of developer time to develop, while also having mostly much higher maintenance cost due to their fast paste, short lived, nature,” the author noted.

In comparison, Curve’s Ethereum mainnet remains a far more lucrative source of income.

The protocol reportedly earns around $28,000 per day from its Ethereum pools—more than 18 times the combined daily revenue from its Layer 2 ventures.

“Curves’ Ethereum Pools generate on a slow day 28,000$ of revenue, the equivalent of approximately 450 L2s, given their average revenue,” he noted.

This is unsurprising considering over 90% of Curve’s total value locked (TVL) remains on the blockchain network, according to DeFiLlama data.

Curve’s DeFi TVL. Source: DeFiLlama

As such, the proposal urged the protocol to cut all development on layer-2 networks and focus on Ethereum.

“Each of those chains require at least the same care as Ethereum, while giving back only very little. By cutting all development in this direction, Curve can regain the head-space to push into more fruitful directions,” the author wrote.

Meanwhile, the proposal’s radical position has sparked discussion within the DeFi protocol’s community about the multi-chain expansion moves.

DeFi analyst Ignas noted that Aave, another prominent DeFi protocol, is experiencing similar challenges.

According to him, Aave’s expansion across multiple chains has proven unprofitable and reflects the difficulty many DeFi protocols face when deploying across numerous Layer 2 networks.

Ignas suggested that the challenges stem from a lack of user traction across most Layer 2 networks, indicating that the Ethereum Layer 2 ecosystem may be approaching saturation.

“We reached an L2 saturation point…Real tough time for undifferentiated L2s,” Ignas stated.

Data from L2Beats supports this viewpoint, revealing that only a handful of Ethereum Layer 2 networks—such as Polygon, Arbitrum, and Optimism—are seeing substantial activity.

Meanwhile, Curve’s core team distanced itself from the proposal, stating that it does not reflect their current roadmap.

“To be clear: this post does not come from the team currently working on Curve, and no one in the team agrees with it (so we probably will NOT take that direction),” the protocol stated.