- The total value locked in Ethereum L2 networks now stands at $51.5B, up 205% YOY.
- Arbitrum and Base hold more than half of Ethereum’s Layer 2 TVL.
Ethereum Layer 2 (L2) has reached an important milestone as the total value locked in 11 different methods rose to $51.5 billion per L2beat data 205% increase in a year. Growth says that more people want these L2 solutions to help build better Ethereum, which happens to be the top platform of smart contract applications.
L2 solutions enable the Ethereum mainnet transactions to run autonomously. This eliminates congestion and reduces fees in transactions. Due to their increased scalability, they are indispensable in the ongoing efforts to expand Ethereum’s ecosystem. Increased usage by both users and investors in native Ethereum assets has greatly helped in L2 adoption and pushing blockchain innovation forward.
Arbitrum and Base are among the most important L2 players, holding over half of the TVL within the L2 ecosystem. The network still leads the race, with a TVL of $18.3 billion, accounting for 35% of the overall value on L2. TVL within the network saw growth at 12% over the weeks leading up to November 28.
The base is the second biggest network and has a total locked value of $11.4 billion in TVL, accounting for 22% of the L2 market size. It just recently smashed new records on processing over 106 TPS while also crossing over 1 billion in transactions over its current trend.
Effect of Ethereum Dencun Upgrades
The Dencun was a significant update, completed in March 2023, important for the users of Ethereum to utilize L2 solutions. This upgrade included ways that stabilized fees and led to average fees on some networks dropping down to 1%. Consequently, using Ethereum became less expensive for users and helped even more people start making use of L2 platforms, such as Starknet, Optimism, Base, and Zora OP Mainnet.
Although L2s work fine, the argument that they may at some point destroy Ethereum’s main network prevails. L2s are making it easy to manage users but might be reducing the income for the network, which could impact the Ether price in the long term. Analysts within the industry argue over whether L2s will contribute to the success of Ethereum or hinder it.
Layer 2 networks are getting better and bigger, so this is something important in the future for Ethereum. Yet, people still talk about how it affects the price of Ether and the use of the mainnet.
