Ethereum’s Layer-2 Networks Dominate Q3 Transactions
In the third quarter, Ethereum’s Layer-2 networks accounted for 61% of all transactions, according to Messari’s State of Ethereum report. The surge was driven by the launch of Base and the popularity of the Friend.tech social token platform. Kunal Goel, senior research analyst at Messari, expressed surprise at the rapid growth of Base and its impact on the blockchain ecosystem. He emphasized the importance of developers and users collaborating to create successful applications. However, Goel remained cautious due to the overall low enthusiasm in the bear market.
Base’s Impressive Growth
Base, incubated by Coinbase, has experienced significant growth since its launch in August. It currently has a total value locked (TVL) of $448 million, placing it among the top four Layer-2 solutions. Arbitrum remains the most utilized by Ethereum users, with 600,000 average daily transactions. However, Base and Optimism have impacted Arbitrum’s network activity, resulting in a 36% decrease in transactions during Q3.
The Rise of Layer-2 Solutions
Layer-2 solutions taking the lead in transaction throughput is not surprising according to experts. It has been predicted that L2 transactions would surpass those on Ethereum’s mainnet due to scalability limitations. Eliezer Ndinga, head of research for 21.co, compared these scaling solutions to how bandwidth revolutionized internet usage. These Layer-2 networks are expected to gain traction as reputable financial institutions adopt the technology.
The Future of Layer-2s
Kunal Goel believes that increased activity on Layer-2s will lead to higher market caps, greater security requirements from Ethereum, and increased demand for Ethereum’s data availability service. He also predicts that after the Dencun upgrade, Layer-2s will become cheaper, resulting in more activity. Goel envisions all decentralized exchange trades moving to Layer-2s in the long term as lower transaction fees benefit high-velocity transactions.
Hot Take: Ethereum’s Layer-2 Networks Thrive in Q3
Ethereum’s Layer-2 networks have emerged as the dominant force in Q3 transactions, accounting for 61% of all activity. The explosive growth of Base and the popularity of Friend.tech have contributed to this surge. While the overall market sentiment remains low, the success of Layer-2 solutions is a positive sign for Ethereum’s scalability. The rise of Base and its impact on other Layer-2 networks like Arbitrum and Optimism highlights the competitive landscape. As reputable financial institutions adopt these solutions, their market caps are expected to increase further. The future of Layer-2s looks promising, especially with anticipated cost reductions and increased activity after the Dencun upgrade.
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