David Edwards
The Ethereum ecosystem continues its upward trajectory, showcasing surging investor interest in Ethereum-native assets. Layer-2 (L2) networks, designed to scale Ethereum’s capacity, have reached an all-time high of $51.5 billion in cumulative total value locked (TVL), according to data from L2beat. This marks an impressive 205% increase from $16.6 billion in November 2023.
Driving Scalability with L2 Solutions
L2 scaling solutions are pivotal for reducing costs and enhancing the transaction speed of the Ethereum mainnet. By processing transactions on secondary chains, these networks alleviate congestion on the main Ethereum chain, optimizing performance for its users. However, some analysts express concerns about L2 networks potentially diminishing Ethereum’s mainnet revenue and impacting Ether’s price performance.
Arbitrum One and Base Propel L2 Growth
- Arbitrum One holds $18.3 billion in TVL, representing 35% of the cumulative L2 TVL.
- Base follows with $11.4 billion, contributing 22% to the L2 ecosystem’s total.
Notably, Base achieved significant milestones, including crossing 106 transactions per second (TPS) and reaching over 1 billion total transactions. This surge has been partly fueled by the popularity of memecoins during the ongoing bull market.
Fee Stabilization Post-Dencun Upgrade
Ethereum’s March 2024 Dencun upgrade played a critical role in stabilizing fees across L2 networks. According to Nick Dodson, CEO of Fuel Labs, the upgrade focused on expanding capacity rather than merely reducing fees. This led to a 99% reduction in median transaction costs for certain L2s, including Starknet, Optimism, Base, and Zora OP mainnet.
