Standard Chartered on Monday called for the taxation of excess profits earned by Layer-2 blockchains operating on Ethereum (CRYPTO: ETH), warning that without such measures, Ethereum’s decline relative to Bitcoin will likely continue.
The recommendation, part of a detailed research note released on Monday, argues that Layer-2 networks—particularly Base—are extracting substantial value from Ethereum without contributing proportionally to its ecosystem.
What Happened: Geoffrey Kendrick, the bank’s Global Head of Digital Assets Research, compared the unchecked profitability of these secondary blockchains to foreign mining companies that face windfall taxes.
“The solution would be to tax Layer 2 super-profits in the same way governments sometimes charge super taxes for foreign-owned mining companies that extract excess profits,” Kendrick stated.
According to the report, Ethereum’s market cap has suffered significantly from the rise of Base, a Layer-2 blockchain developed by Coinbase (NASDAQ:COIN).
The research estimates that Base alone has drained approximately $50 billion in value from Ethereum’s market …
Full story available on Benzinga.com