Ethereum Upgrade Fusaka Revolution! Nansen Analysis: L2 Value Flows Back to ETH Staking

The upcoming Fusaka upgrade to Ethereum may reshape the way value flows back to ETH from Layer 2 (L2) networks. Today, the vast majority of economic activity generated by rollups—including MEV extraction, sequencing revenue, and transaction ordering—remains confined to the L2 layer, with profits flowing to independent operators rather than Ethereum itself. The latest analysis from on-chain intelligence firm Nansen suggests that this Ethereum upgrade could change this dynamic.

A New Rollup-Based Foundation Reshapes Value Flow

Fusaka proposes the technical infrastructure required for “rollup-based” models, where Ethereum validators take on the responsibility for L2 transaction sequencing. L2s no longer need to rely on external or proprietary sequencers and can be directly integrated with Ethereum’s validator set, making their incentive mechanisms more closely aligned with the base layer. This Ethereum upgrade introduces a rollup-based infrastructure where Ethereum validators will take over L2 sequencing.

There is currently a structural issue in the Layer 2 ecosystem: a disconnect between value accrual and value creation. Major L2 networks like Arbitrum, Optimism, and Base process billions of dollars in transaction volume, generating substantial MEV (Maximum Extractable Value), sequencing revenue, and transaction fees. However, the vast majority of these economic rewards do not flow back to the Ethereum mainnet, but are instead captured by independent L2 sequencers and operators.

Søndergaard explains that if rollups adopt this structure, L2 MEV will start flowing to ETH stakers. As blob demand increases, fee burning will rise, validator rewards will grow through pre-confirmation revenue, and Ethereum will begin to capture a larger share of the economic activity currently accruing at the L2 level.

Three Major Value Recapture Mechanisms Brought by the Fusaka Upgrade

MEV Redistribution: MEV extraction at the L2 layer will be performed by Ethereum validators, with rewards flowing directly to ETH stakers

Increased Fee Burning: Higher blob demand will lead to more ETH being burned, reducing circulating supply

Pre-Confirmation Revenue: Validators can earn additional revenue by providing pre-confirmation services for L2 transactions

The core logic of this mechanism design is incentive alignment. When L2 sequencing rights are controlled by Ethereum validators, L2 economic activity will directly strengthen the security and value of the Ethereum mainnet. Validators are motivated to maintain the network because of increased rewards, while ETH holders benefit from more fee burning and staking income.

However, Søndergaard also emphasizes that none of this will happen automatically. The long-term impact depends entirely on whether L2 teams choose to abandon their current sequencing models. This is the biggest uncertainty facing the Fusaka upgrade. Existing L2 projects have already established mature sequencer infrastructures and profit from them; asking them to voluntarily give up this revenue is not easy.

L2 Team Decisions and Incentive Design

The success of this Ethereum upgrade hinges on whether L2 teams are willing to adopt the new rollup-based architecture. For L2 projects, this is a tough choice. On one hand, keeping independent sequencers means they can continue to capture all sequencing revenue and MEV; on the other, adopting Fusaka’s new architecture will integrate them more closely into the Ethereum ecosystem, providing stronger security guarantees and credible neutrality.

From a business perspective, L2 projects may hesitate. Arbitrum and Optimism’s sequencers generate millions of dollars in daily revenue, supporting project operations and development. If sequencing rights are handed over to Ethereum validators, this revenue would be greatly reduced. However, from a long-term ecosystem health perspective, adopting Fusaka’s architecture may be more beneficial.

First, sequencing based on Ethereum validators is more decentralized and censorship-resistant. Currently, many L2s use a single or a few sequencers, creating centralization risks. If a sequencer is attacked or censors transactions, the entire L2 network could be paralyzed. Using Ethereum’s validator set for sequencing would greatly enhance system resilience and credibility.

Second, aligning value with the Ethereum mainnet increases L2 legitimacy and appeal. Institutional investors and enterprise users prefer L2s closely integrated with the Ethereum mainnet, as this means stronger security guarantees and clearer regulatory status. If L2s are seen as independent systems, their long-term development may be limited.

Third, support and resource allocation from the Ethereum community are also important considerations. L2s adopting the Fusaka architecture may receive more support from the Ethereum Foundation and community, including technical assistance, ecosystem funding, and marketing. Conversely, L2s that insist on independent sequencing may face community skepticism or even resistance.

Currently, no L2 project has publicly committed to adopting the Fusaka architecture. The Arbitrum and Optimism development teams have stated they are evaluating the technical details but have not made clear statements. Base, launched by Coinbase, may be more inclined to align with the Ethereum mainnet. ZK-rollup projects like zkSync and Starknet are also watching closely. In the coming months, the decisions of these L2s will determine the actual impact of the Fusaka upgrade.

Structural Improvements for Institutional-Grade Financial Applications

The potential advantages of Fusaka are not limited to validator economics. Edwin Mata, CEO and co-founder of enterprise tokenization platform Brickken, says this Ethereum upgrade brings substantial improvements to Ethereum’s settlement architecture. With reduced data loads for rollups and validators, the network becomes more predictable in terms of performance and cost—a key requirement for regulators assessing whether public blockchains can support issuance and post-trade processes at scale.

Mata points out that this predictability is crucial for capital market participants who require a reliable settlement environment. By enhancing Ethereum’s stability, Fusaka increases its attractiveness as a venue for institutional-grade financial activity. In traditional finance, settlement certainty and predictability are fundamental requirements. If a system’s transaction fees fluctuate wildly or settlement times are uncertain, financial institutions will struggle to build on it.

Ethereum’s past gas fee volatility has long been a barrier to institutional adoption. During periods of network congestion, gas fees can spike to hundreds of dollars, making small transactions completely unfeasible. While L2s have solved part of the problem, data transmission costs between L2s and the mainnet (blob fees) remain volatile. Fusaka, by optimizing data structures and improving verification efficiency, will make this volatility more manageable.

For the tokenized asset sector, Fusaka can simplify key operational mechanisms. Lower fees and higher L2 throughput will create a more efficient environment for the lifecycle of tokenization tools, enabling smoother transfers, faster reconciliations, and greater reliability during distribution events. Already, billions of dollars of real-world assets have been tokenized on Ethereum, including real estate, bonds, stocks, and commodities.

Mata also notes the upgrade’s impact on network resiliency. Fusaka lowers the operational barrier for node participation, expanding the validator base and reducing concentration risk. For financial markets that depend on systems with no single point of failure, greater decentralization is a fundamental advantage. Ethereum currently has over 1 million validators, but running a full node remains a high bar. Fusaka, by optimizing data storage and synchronization mechanisms, will enable more people to run nodes.

Upgrade Timeline and Ecosystem Readiness

As the Ethereum ecosystem prepares for the Fusaka upgrade, analysts and industry leaders will closely watch whether L2s adopt the base-layer rollup model. If adopted, this Ethereum upgrade could mark a turning point in how Ethereum captures value from its dependent ecosystem.

The Fusaka upgrade is expected to be implemented sometime in 2026, with the exact date yet to be determined. The Ethereum Foundation and core developer teams are conducting intensive testing and audits. The complexity of this upgrade is high, involving multiple changes to both the consensus and execution layers, so ample preparation time is required.

Key Milestones for the Fusaka Upgrade

Testnet Deployment: Expected to go live on testnets like Goerli by late 2025

Client Implementation: Major Ethereum clients complete code integration and optimization

Community Discussion: Feedback collection from L2 projects, validators, and application developers

Mainnet Activation: Expected to be implemented via hard fork in 2026

For ETH holders and stakers, Fusaka could bring significant yield improvements. If mainstream L2s adopt the new architecture, the annualized yield for stakers could rise from the current 3-4% to 6-8% or even higher. This increase in yield does not depend on ETH price appreciation but comes from actual economic activity and value capture, making it more sustainable.

However, investors should also recognize the risks. If L2 teams broadly refuse to adopt the new architecture, Fusaka’s actual impact may fall far short of expectations. Additionally, unforeseen technical issues during implementation could delay the upgrade or reduce its effectiveness. Therefore, expectations for Fusaka should remain rational and cautious.