One challenge in operating blockchain networks is cost. In particular validators must take comission for their services from stakers and at times sell tokens in order to fund operations. However if there is no demand for the token then the token is down only which reduces the economic security of the network. At this point the network can be attacked by malicious actors. Also there is the death spiral risk. Conversely if the network generates revenue via REV then stakers and validators will want to profit share. This can be fees paid to validators for tx inclusion in a block which are then distributed equally by stake weight to delegators + a fixed cut for the operator, the REV (REV = Transaction fees + maximal-extractable-value (MEV) tips) can also be burned reducing the supply of the token similar to EIP 1559. The burn mechanism can place a soft cap on the token supply even amidst issuance if demand for blockspace is sustained.
One nice feature of Layer 2s is that they do not have to pay validators. Instead most run a single sequencer cluster which provides fast confirmations for users and collects fees which go to the DAO or corporation (coinbase in the case of base). L2s must pay a consensus/da provider like Ethereum with different types of constructions
- Rollup
- Validium
- Plasma
While its still early in the protocols lifecycle we should explore this path in the event the token begins to enter a death spiral as sellers exit . One challenge Namada has is its dependence on liquidity from the cosmos ecosystem and general association. Ethereum and Solana have significantly more liquidity. Ethereum is the best place to launch a layer 2. This could provide a pivot option for Namada to achieve economic sustainability.