Key Takeaways
- Ethereum’s Layer 2 networks have cumulatively surpassed $5 billion in total value.
- Optimistic Rollup Solutions Arbitrum One and Optimism account for more than 80% of the locked value.
- zkSync, which will launch its mainnet 2.0 on Friday, has also seen its total locked value increase by 19% this week.
Share this article
Arbitrum currently owns more than half of all total value locked at Tier 2.
Within Ethereum layer 2
Ethereum’s Layer 2 ecosystem is on the rise.
Per L2Beat dataThe total value captured in the Layer 2 scale networks of the top smart contract blockchains topped $5 billion on Wednesday, up 9.2% over the past week. The total value on Ethereum Layer 2 is currently approximately $5.09 billion.
The jump in locked value comes amid a period of bullish momentum in the cryptocurrency market. Amid the rebound, ETH has gained nearly 20% in market value over the past week and is currently trading at around $1,540. ETH is widely used as Ethereum’s Layer 2 base asset, so its rise explains to some extent the rise in total locked value.
Arbitrum One and Optimism, two optimistic aggregation solutions that together account for more than 80% of the value captured at Layer 2, have seen increases of 9.3% and 10.3% respectively in total locked value. Arbitrum One currently holds approximately $2.59 billion, more than half of the locked-in value at Tier 2.
While the ETH rebound has helped push Layer 2’s value to new all-time highs, it is not the only factor behind the rise. This week is a big week for the Layer 2 ecosystem, as zkSync is about to launch its new product, zkSync 2.0, on mainnet Friday. As a result, capital has flowed into the zkSync protocol, up about 19% this week. zkSync is a ZK-Rollup solution and has seen slower growth than its leading Optimistic Rollup counterparts to date, but the project hopes tomorrow’s launch will boost the network.
ZK rollups and optimistic rollups
ZK-Rollups use zero-knowledge proofs to aggregate transactions and reduce the amount of data required to validate transactions on the Ethereum mainnet, which in turn offers faster transaction speeds and cheaper fees. Unlike Optimistic Rollups, they do not require a long dispute period to maintain security (e.g. it takes about a week to send funds from Arbitrum One back to the Ethereum mainnet). While Optimistic Rollups are currently leading Ethereum’s Layer 2 race, ZK-Rollups have long been touted as the technology that could help Ethereum prepare for mass adoption. Ethereum creator Vitalik Buterin has discussed them at length, arguing at this month’s Devcon conference that they “could be at least as important to the technology as blockchains.”
Interestingly, while the total value at Layer 2 has fallen from its April 2022 peak in dollar terms, when it exceeded $7.4 billion, the amount of ETH in the ecosystem is now higher. According to L2Beat data, the current total locked value is the equivalent of approximately 3.25 million ETH, after a steady increase over the past year.
While the Ethereum Merge was the second-largest and most anticipated blockchain update this year, Ethereum enthusiasts have long hoped that the Layer 2 growth will help the ecosystem achieve mass adoption by lowering costs and increasing network more accessible. While Ethereum Mainnet still holds the majority of all capital in the crypto ecosystem just under $32 billion locked down, Layer 2 appears to be catching up quickly.
Disclosure: At the time this piece was written, the author owned ETH and several other crypto assets.
Share this article
