We provide an economic model of the interaction between a Layer-1 (L1) blockchain and an associated Layer-2 (L2). Our main finding is that, even when the L1 blockchain features value-creating decentralized applications (dApps), there nevertheless exist realistic conditions such that both the L1 blockchain investment and the L1 cryptoasset market value vanish over time. These results arise when the L2 becomes sufficiently attractive for investment relative to the L1, a situation that would occur if developers focus exclusively on improving the L2s while ignoring the L1. Crucially, our results establish that, even if the L2s are intended as the primary vehicle for scaling, developers must nevertheless continue to improve the L1 to avoid an adverse outcome for the L1.