The transaction numbers on Ethereum and its top Layer 2 (L2) solutions have surged to nearly three times higher than the previous bull market peak. This remarkable growth within the L2 ecosystem has not adversely affected the Ethereum mainnet, where transaction volumes have remained stable at approximately 1 million transactions per day.
Spotlight on Ethereum Layer 2s
According to the latest report by IntoTheBlock’s weekly newsletter, this week’s spotlight is on ETH’s Layer 2 scaling solutions. A detailed analysis of the competitive landscape within optimistic rollups and key metrics reveals their profound impacts on the broader Ethereum network.
Despite consistent transaction levels, network fees for Bitcoin have experienced a 16.6% drop. On the other hand, ETH fees have risen by 2.6%, particularly in response to heightened market volatility.
Exchange netflows have seen a remarkable trend, with Bitcoin and ETH witnessing $400 million in outflows from centralized exchanges. It suggests a move by holders to secure their assets by retaining custody.
Ethereum L2 Activity Soars
Ethereum’s L2 solutions have rapidly gained traction over recent months, with new Layer 2s launching almost weekly. Coinbase’s Base L2, built on the Optimism infrastructure, has quickly attracted users, temporarily surpassing Optimism in daily transactions shortly after its launch.
Optimism’s momentum is palpable, as its transactions reached an all-time high, surpassing those of Arbitrum for the first time in 2023. Sam Altman’s Worldcoin launch on the Optimism network significantly contributed to this surge.
While the competition among Layer 2 solutions intensifies, ETH continues to reap benefits. The total number of transactions involving L2s has soared to three times the bull market peak, yet Ethereum’s mainnet remains resilient, maintaining its transaction volume of approximately 1 million transactions per day.
Arbitrum remains dominant in decentralized finance (DeFi), boasting financial applications’ highest liquidity and activity. Within a short span, Coinbase’s Base L2 has accumulated an impressive $170 million in total value locked (TVL), surpassing Cardano and Bitcoin.
An upcoming Ethereum upgrade, EIP-4844 (Dencun), is expected to reduce L2 transaction costs by 10x-100x drastically. Although the launch timeline is yet to be confirmed, Ethereum’s developers are gearing up for the Devnet 8 testnet, which will feature the proposed improvements.
Amidst market volatility, Ethereum’s Layer 2 solutions have proven to be a bright spot. Optimism has seen remarkable adoption, Base has emerged as a rapidly growing chain, and Arbitrum continues to dominate DeFi.
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