Four hours ago, Starknet, one of Ethereum’s leading Layer 2 scaling solutions, went down.
The outage left users unable to move funds or interact with apps built on the network, sparking debate about the reliability of Layer 2 technology at a time when demand for cheaper transactions is rising.
What Happened and Why It Matters
Starknet is built on zero-knowledge rollups, a type of cryptography that lets the network process transactions off Ethereum before sending a compressed record back to the main chain. This method enables faster and cheaper transactions. However, the system depends on sequencers—specialized servers that order and bundle transactions. When sequencers fail, as seen in Starknet’s downtime, the network can become unstable and freeze.
NEW: ETHEREUM L2 STARKNET DOWN FOR OVER 20 MINUTES pic.twitter.com/3S7tsvML8y
— DEGEN NEWS (@DegenerateNews) September 2, 2025
This isn’t the first time an Ethereum Layer 2 has faced technical hiccups. Earlier this year, Arbitrum experienced a short pause in its sequencer, and Optimism has also reported occasional service issues.
1/ With @arbitrum Sequencer down for an hour, Arbitrum chain effectively reduced itself to L1 Ethereum wrt to cost and speed, but it never stopped working. How is it possible ? And why @l2beatcom claims that users should propose blocks when operator is down ? 🧵👇 pic.twitter.com/2Wh9bHD7SB
— bartek.eth (@bkiepuszewski) September 16, 2021
While these disruptions are often fixed within hours, they highlight the growing pains of scaling Ethereum. According to L2Beat, a data site that tracks Layer 2 networks, the total value locked across these solutions is more than $25 billion, showing how much is at stake when outages occur. For regular users, an outage feels like being locked out of a bank branch when you urgently need cash.
The Bigger Picture in Layer 2 Adoption
Despite setbacks, Layer 2 networks remain one of the hottest trends in crypto. Fees on Ethereum’s main chain often climb above $20 during peak activity, while transactions on Starknet usually cost pennies. This difference has driven traders, gamers, and even NFT projects to move to Layer 2. This is an example of what these Ethereum fees are generating:
NEW: WLFI TOKEN CONTRACT HAS BURNED OVER $1M IN GAS FEES ON ETHEREUM IN THE LAST 3 HOURS pic.twitter.com/HLwXyZWAov
— DEGEN NEWS (@DegenerateNews) September 1, 2025
A real-world example is Immutable, a gaming platform that relies on Starknet’s technology to power in-game asset trading. Players benefit from faster, cheaper transactions, but the outage shows the risks of relying on a single Layer 2 for activity that people expect to be always available.
Investors are paying attention. Venture funding for Layer 2 projects topped $1.5 billion in 2023, according to Crunchbase. The promise of speed and scale is strong, but reliability remains the elephant in the room.
Disclaimer
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