Ethereum’s Layer-2 Networks Account for 61% of Transactions in Q3
A recent report by Messari on the State of Ethereum reveals that 61% of all transactions in the third quarter were conducted on Ethereum’s Layer-2 networks. This growth can be attributed to the successful launch of Base and the increasing demand for the Friend.tech social token platform.
It is still a bear market, and interest and enthusiasm across the board is low.
Messari’s senior research analyst, Kunal Goel, expressed astonishment at the success of both platforms. He highlighted how Base revolutionized the trajectory of any blockchain and emphasized the importance of Friend.tech’s decision to launch on Base. However, Goel also acknowledged that overall interest and enthusiasm are dampened due to the current bear market.
Growth and Competition Among Layer-2 Solutions
Base, nurtured by Coinbase, has experienced significant growth since its launch in August. It currently has a total value locked (TVL) of $448 million, making it one of the leading layer-2 solutions alongside Arbitrum, Optimism, and zkSync Era. Arbitrum remains the favorite among Ethereum users with an average of 600,000 daily transactions. However, Base and Optimism are challenging Arbitrum’s dominance, causing a 36% drop in its network activity in Q3.
According to data from 21.co’s Dune dashboard, Arbitrum has a TVL lead of $4.22 billion, followed by Optimism with $1.27 billion. In terms of market capitalization, Arbitrum currently leads with a $30 million difference.
The Rise of Layer-2s in Transaction Throughput
Kunal Goel believes that the dominance of Layer-2s in transaction throughput aligns with market expectations. He suggests that Ethereum’s mainnet is not sufficient in the long run, as indicated during the 2020-21 bull market. Eliezer Ndinga, chief researcher at 21.co, shares similar sentiments, comparing scaling solutions to the evolution of the internet and labeling layer-2s as formidable players in the blockchain arena.
Goel predicts a prosperous future for Layer-2s, anticipating increased market cap growth and demand for Ethereum’s data services. He expects a surge in activities on Layer-2 networks as costs decrease post the Dencun upgrade. Goel believes that L2s will become the preferred platform for DEX trades, especially benefiting high-frequency transactions due to reduced transaction fees.
Hot Take: Layer-2 Networks Revolutionizing Ethereum’s Scalability
The rise of Layer-2 networks in Ethereum’s ecosystem is revolutionizing its scalability and transaction throughput. With 61% of transactions now happening on Layer-2 solutions, it is evident that these networks are meeting market demands and addressing the scaling constraints of blockchains. The success of platforms like Base and Friend.tech further highlights the potential for innovation and growth in this space. As mainstream financial bodies embrace layer-2 technology, we can expect even greater adoption and development in the future.
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