Ethereum Co-Founder Joseph Lubin: Low Layer 1 Fees Key to Long-Term Growth

Ethereum co-founder Joseph Lubin has stated that keeping Layer 1 transaction fees low is critical for the network’s long-term expansion. In a recent interview, Lubin argued that prioritizing accessibility for businesses and users over short-term fee revenue will ultimately strengthen the Ethereum ecosystem.

The Case for Low Fees

Lubin explained that high transaction costs on Ethereum’s base layer could deter new entrants, especially small businesses and individual developers. Instead, he advocates for a strategy where Ethereum’s Layer 1 remains affordable, acting as a settlement layer for a growing number of Layer 2 networks and private Ethereum Virtual Machines (EVMs).

He drew parallels to companies like Robinhood, which built massive user bases by lowering barriers to entry. Lubin predicted that tens of thousands of businesses will integrate Ethereum-based services over the next two to three years, leveraging a combination of Layer 1, Layer 2, and private EVMs to create interoperable financial and data applications.

Interoperability and Value Accrual

A key part of Lubin’s vision is the seamless interoperability between these networks. As more services are built on Ethereum’s infrastructure, the utility of the network increases, which in turn drives demand for ETH. This, he argues, will naturally boost Layer 1 fee revenue without requiring high base-layer costs.

The ‘Ultrasound Money’ Dynamic

Lubin also highlighted the deflationary mechanics of ETH. He pointed to the combination of ETH being locked in staking, the amount of ETH burned through transaction fees exceeding new issuance, and the network’s transition to proof-of-stake. This structure, often referred to as ‘Ultrasound Money,’ is designed to make ETH scarcer over time, potentially increasing its value as demand grows.

According to data from ultrasound.money, ETH has been net deflationary over certain periods, though the rate fluctuates with network activity. Lubin’s comments reinforce the idea that long-term value creation depends on ecosystem growth, not just short-term fee spikes.

Implications for Developers and Investors

For developers, Lubin’s stance signals that Ethereum’s core development will continue to prioritize scalability and low-cost access. This could encourage more experimentation with Layer 2 solutions like Arbitrum, Optimism, and zkSync, as well as private EVM deployments for enterprise use.

For investors, the message is that ETH’s value is tied to its utility as the backbone of a multi-chain ecosystem. If Lubin’s prediction of mass business adoption materializes, the demand for ETH for staking, gas, and settlement could increase significantly, supporting its price over the long term.

Conclusion

Joseph Lubin’s comments provide a clear strategic direction for Ethereum: prioritize low fees to attract builders and users, then let the network effects drive value. This approach contrasts with networks that rely on high base-layer fees for revenue, and it positions Ethereum as a long-term platform for global, decentralized applications. As the ecosystem matures, the interplay between Layer 1 and Layer 2 will be crucial in determining whether this vision succeeds.

FAQs

Q1: Why does Joseph Lubin believe Layer 1 fees should be kept low?
Lubin argues that low fees attract more businesses and users, which grows the ecosystem. Over time, increased utility and demand for ETH will generate more revenue than high fees would in the short term.

Q2: What is ‘Ultrasound Money’ in the context of Ethereum?
‘Ultrasound Money’ refers to Ethereum’s deflationary monetary policy, where ETH is burned as part of transaction fees and new issuance is reduced. Combined with staking, this can make ETH scarcer and potentially more valuable.

Q3: How do Layer 2 networks fit into Lubin’s vision?
Lubin sees Layer 2 networks and private EVMs as essential for scaling Ethereum’s utility. They handle high transaction volumes at low cost, while Layer 1 provides security and settlement. Interoperability between these layers is key to the ecosystem’s growth.