in a high fee environment, users can be priced out of transacting on the base chain, as they cannot afford the transaction fees.
they may try to onboard to layer 2 (LN), only to discover that they are still subject to layer 1 transaction fees, for the purposes of opening, splicing/balancing and closing channels. (they must also hold sufficient balance to broadcast a recent state transaction, should their channel counterparty attempt to force-close / cheat them).
as fees rise considerably, if a user cannot afford to transact using non-custodial layer 1, there is a strong possiblity that they will also be unable to afford non-custodial layer 2.
those who can afford the fees will benefit from increased transaction throughput (on layer 2), however layer 2 does not solve the problem of high fees, and thus scales the overall userbase only marginally.
That’s understandable for me. Thanks.
But the user base on custodial solutions could expand, no?
custodial solutions could expand, as they're not constrained by transaction fees, yes.
projects like fedimint and e-cash are somewhat more interesting than straight up custodial LN, as they at least attempt to offer the end user some degree of privacy / safeguards against being rug-pulled.
the unfortunate reality is, however, that custodial solutions will always be a less preferred option, vs non-custodial.
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