Journalist
Posted:
- The exponential growth of L2’s on-chain activity occurred during the bear market.
- Optimistic roll-ups maintained an average daily transaction share of 67% in September.
The Ethereum [ETH] the Layer-2 (L2) landscape has grown by leaps and bounds in 2023. Demand for blockspace scaling solutions has skyrocketed as users have signed up to take advantage of its relative benefits.
L2s are seeing a sharp increase in transaction costs
Erik Smith, Chief Investment Officer at 401 Financial, and a keen observer of the blockchain industry, took to social platform
Based on data from on-chain analytics company Token Terminal, Smith stated that network fees collected by L2 networks have increased from 0 to $15 million in just two years.
It was amazing to see exponential growth during the bear market. This was in particular the phase when activity in the chain in the large L1s stagnated.
Monthly fees paid for using L2 blockchains
$0 to $15 million in 2 years. In a bear market.
The demand for block space is up and to the right.
through @tokenterminal pic.twitter.com/L48oSjs7z2
— Erik Smith, CFP® (@eriksmithcfp) September 27, 2023
L2s offload Ethereum
Over the years, Ethereum has suffered severe crashes due to rapidly growing user traffic. This led critics to question its long-term scalability.
L2 solutions, built on top of the base layer Ethereum, turned out to be the answer to the scalability question. The intention was that these L2s would handle the majority of low-value transactions over time, with the base layer providing security and decentralization.
Although it started slowly, the vision seemed to become reality. According to IntoTheBlock’s Lucas Outumoro, bullish roll-ups maintained an average daily transaction share of 67% in September, compared to just 16% a year ago.
Ethereum Layer 2 adoption has steadily increased in 2023
The share of optimistic roll-ups in daily trades averaged 67% in September, compared to just 16% a year ago pic.twitter.com/gTduPxMO4g
— Lucas (@LucasOutumuro) September 27, 2023
As we know, the optimistic rollups include some of the best L2s, such as Optimism [OP] and Arbitrum [ARB] and the recently launched Base. In fact, Base has outperformed Ethereum in terms of daily transactions on most days since launch.
According to L2Beattotal transaction throughput on L2s will metaphorically grow by 2023. On September 27, average transactions per second (TPS) was 60, almost 5x higher than Ethereum.
Source: L2Beat
Onwards and upwards for Ethereum scaling?
It seemed more likely that most activities in the chain will switch to L2s in the coming days. The upcoming Ethereum Cancun upgrade, or EIP-4844, could accelerate the pace. This upgrade was intended to significantly reduce Ethereum’s gas fees and increase transaction throughput, allowing roll-ups to scale.
