Why a team should probably not use their own native token on their ETH L2

reasons why a team should probably *NOT* use their own native token on their ETH L2 from someone who has seen L2s grow since early 2022 (me!). Feedback and discussions welcome: Having a native token, let's say $token, as the L2 gas token instead of $ETH for your Ethereum L2 can cause some unexpected troubles which could backfire and hurt your chain’s growth. Let’s see what those are: 1) Sell pressure on your native token: L2s settle data on top of Ethereum: which means they need to use Ethereum’s currency $ ETH. Even if, at the user level people use $TOKEN to pay gas, the currency still needs to convert to $ ETH to be able to ‘settle’ to the L1 chain (ethereum DA cost). This means all transactions would become a sale event for$ TOKEN which would cause downwards pressure on the its price. 2) Interoperability hurdle: Users will have a difficult time bridging across chains and will have to deal with a basket of currencies. With $ETH they will just use $ETH. Otherwise you could be left with a scenario where you bridge eth, but then need $TOKEN to pay gas, but then do not have enough $Token on your tokenchain to convert your eth into $token, this is quite a troublesome UX hurdle. 3) Access to Dependencies: ETH is already readily available as a native L2 integration wit many necessary dependencies. These things take time to coordinate and thus needing to integrate a new currency onto the dependencies would be costly, in both time to market and expenses. - All L2 marketplaces - All L2 wallets - All L2 builder faucets - All L2 supporting CEXEs/direct on-ramps 4) Liquidity of L1 token: If there are price changes, or low liquidity/slippage of the underlying L1 asset ($ETH) then it means that your users could get failed txs due to issues with backend swaps failing. ————————————————— Alternatively, if value accrual is what is wanted, here are some ways to go about it on L2: - Sequencers generate revenue, and will generate more after EIP 4844 depending on how/if chains alter their L2 fee. - L2 chains can choose where to spend and allocate that excess revenue, it could go back to stakers, to get more creative, it can also go back to the top contracts on the chain thus incentivizing builders to migrate there (CSR model). Or you can gamify it to reward the top non Sybil users on your chain extra staking yield, this means more usage can be driven in expectation of increased yield, you’d just need a way to weed out Sybil lets (not easy) but you can gate this with attestations/proof of humanity.