The proliferation of Layer 2 solutions on Ethereum is fragmenting liquidity across the network, several analysts have said. 

The range of Layer 2 solutions on the Ethereum network, from Arbitrum, Polygon and Optimism, is part of a diverse range of strategies aimed at addressing scaling issues.

"It’s been argued that the large number of Layer 2 blockchains emerging to combat scalability issues on the Ethereum network is causing a fragmentation of liquidity across the blockchain, weakening the operations and adoption of a blockchain or applications on that blockchain," Gemini Principal of Institutional Sales Patrick Liou told The Block.

A recent Gemini institutional insights report added that a new Ethereum Layer 2 is appearing every 19 days, which adds to concerns that …