Ethereum Layer 2 networks just set a new record

The total value locked (TVL) on Ethereum layer 2 networks recently hit a new all-time high in January, a testament to the continued adoption of Ethereum. Layer 2 networks sit on top of the Ethereum blockchain and help scale it by processing off-chain transactions before sending data to the main blockchain. According to data from L2BEAT, a Layer 2 analytics platform, the TVL of these scaling solutions recently hit an all-time high of $21.16 billion, representing 340% growth from the same day last year . Ethereum Layer-2 networks hit new milestone 2023 was a big year for Ethereum as the altcoin and its scaling solutions saw a steady increase in TVL despite strong competition from other networks like Solana and Cardano. L2Beat data shows that the TVL of these scaling solutions started in 2023 at $4.81 billion, but grew steadily to end the year at $19.98 billion, a growth of 315%. This growth was particularly exacerbated in the last quarter of 2023 and continued into 2024. TVL grew by $1.18 billion in the first three days of January to reach $21.16 on January 3, its current all-time high. At the time of writing, TVL now stands at $20.41 billion, up 3.82% over the past seven days. A large fraction of this Layer 2 TVL can be attributed to Arbitrum One, and the scaling solution currently has $10.05 billion worth of cryptocurrencies locked. OP Mainnet, formerly called Optimism, is in second place with a current TVL of $5.84 billion. 57% of this TVL is made up of OP tokens, compared to Arbitrum One, whose ARB token makes up only 36% of the TVL. ETH price remains at $2200 | Source: ETHUSD on Status of the ETH Network This massive growth shows that Ethereum users are flocking to Layer 2 networks to escape high gas fees and congestion on the mainnet. Ethereum’s TVL also saw steady growth throughout the year, totaling $7.6 billion in the final quarter of 2023. Data from DeFiLlama shows that Ethereum’s TVL is now $28.532 billion. However, Ethereum has seen its daily active addresses and transaction count drop in recent months. Artemis data revealed that Solana and Sui are currently outperforming the network in terms of daily transaction count. The recent competition from Solana led one analyst to describe Ethereum as digging its own grave by relying too much on its Layer 2 networks for scalability. Some layer 2 chains also currently process more transactions than Ethereum itself. L2BEAT puts monthly transactions on zkSync Era and Arbitrum at 39.91 million and 35.54 million respectively, ahead of Ethereum’s tally of 33.91 million transactions. Featured image from Yahoo Finance, chart from Disclaimer: The article is provided for educational purposes only. It does not represent NewsBTC’s views on whether to buy, sell or hold investments, and investing naturally carries risks. It is recommended that you conduct your own research before making any investment decisions. Use the information provided on this website at your own risk.

Leave a Comment