Ethereum layer-2 networks achieved a significant milestone in November 2023 surpassing a total value locked (TVL) of almost $15 billion within their contracts, as reported by blockchain analytics platform, L2Beat.
The list of Ethereum layer-2 networks includes:
- Arbitrum One
- Optimism, Base
- Polygon zkEVM
- Metis
and various others.
Before June 15 2023, the total value locked (TVL) in Ethereum layer-2 networks was less than $10 billion, and the combined TVL had been decreasing since reaching a peak of $11.8 billion in April 2023.
Some of the top Layer 2 Projects (L2Beat)Starting from June 15 2023, there has been a positive growth in the total value locked (TVL) on Ethereum layer-2 networks. By October 31 2023, these networks had reached a new high of nearly $12 billion in combined TVL. The trend continued, surpassing the $13 billion TVL mark on November 10 2023 and reaching nearly $14.8 billion at the time of the latest data.
1 Year TVL (L2beat)The number of such networks continues to increase as well as providing different options and advantages to users. The latest is Mara, the Africa-focused crypto startup, which is set to also launch its highly anticipated Ethereum layer 2 chain, Mara Chain.
According to Metis decentralization coordinator, Elena Sinelnikova, Ethereum’s high gas fees during the bull market left an indelible impact on users, leading to a desire for alternatives when demand started to come back.
“At the time of bull market, Ethereum at peak times was very nonscaleable, which meant that transactions were slow and very expensive because of the bull market. It would be hundreds of dollars just in transaction fees for one transaction, so therefore it was not sustainable.”
Another factor contributing to the success of layer 2 networks during the bear market is the effective marketing efforts by their development teams. Successful marketing has led to increased user activity, attracting more participants and contributing to higher yields within layer 2 networks.
“They are deploying capital to attract new users and to attract new business into DeFi,” Sinelnikova stated.
“DeFi people from all ecosystems, they always go where there are big yields, and this is just naturally happening, and is the nature of business.”
However, while layer-2 solutions have gained popularity for their scalability enhancements over the last year, they often introduce a trade-off in decentralization, insiders contend.
“At the execution layer, where transactions are processed, centralized sequencer nodes are employed, raising concerns about potential censorship or government interference. This centralized aspect in layer-2 implementations challenges the core principles of decentralization and trustlessness that have underpinned the blockchain space,” said Kelsey McGuire, Chief Growth Officer for layer-1 network, Shardeum.
McGuire anticipates that competition from layer 2 solutions will drive enhancements to layer 1 protocols, resulting in improved throughput and functionality for the foundational blockchain layers.
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