- The scaling solution processed 5.17x more transactions than the base layer over the past 7 days.
- ETH L2’s TVL has jumped 4x since last year.
Ethereum [ETH] The Layer 2 (L2) landscape has expanded exponentially over the past year.
Blockspace demand for scaling solutions is at its peak and users are joining in to take advantage of its relative advantages.
L2 attracts users to the Ethereum ecosystem
According to a recent post from on-chain analytics firm Token Terminal, top ETH scaling solutions support 9 million monthly active users, which represents a significant 9x increase from last year.
— Token Terminal (@tokenterminal) February 10, 2024
It was interesting to observe that this exponential growth occurred during a bear market, when on-chain activity across key L1s was stagnant.
L2 solutions built on top of Ethereum’s base layer were predicted to be the answer to the scalability problem.
Over time, the plan was for these L2s to handle the majority of low-value transactions, with the base layer responsible for security and decentralization.
This disruptive vision was slow to take hold at first, but it is finally beginning to bear fruit.
L2s clock enables 5x more transactions than mainnet
Analysis of L2Beat data by AMBCrypto shows that, as of this writing, the average total transactions per second (TPS) across L2 blockchains is 47.37. On the other hand, the mainnet figure is only 11.70.
In fact, the scaling solution processed 5.17x more transactions than the base layer over the past seven days.
The twin benefits of higher transaction throughput and lower fees are also attracting many decentralized applications (dApps) to ETH scaling solutions.
This resulted in a significant capital injection.
ETH L2 becomes a DeFi hub
As of this writing, AMBCrypto observed using L2Beats data that over $23 billion is locked in the L2 chain. This marked an almost fourfold increase compared to last year.
While this is still lower than Ethereum’s Total Value Locked (TVL) of $39.41 billion, the impressive growth trajectory reflects rising L2 demand.
It was no surprise that the expansion of the L2 sector would bring positive momentum to the ETH price. All scaling solution users pay transaction fees with their ETH.
Is your portfolio green? Check out our ETH Profit Calculator
Therefore, the higher the demand for L2 block space, the higher the demand for ETH coins.
As of this writing, the second-largest cryptocurrency is trading at $2,553, marking a double-digit weekly increase of 10%, according to CoinMarketCap.