Ethereum L2 TVL Nears $30 Billion as Layer 2 Solutions Gain Traction

The total value locked (TVL) in Ethereum layer 2 solutions has reached a new all-time high of US$29.65 billion, according to L2Beat, a website that tracks the performance of various scaling solutions for Ethereum. This represents a 9.2% increase in the past week, as more users and projects migrate to layer 2 platforms to enjoy lower fees, faster transactions, and higher throughput.

Layer 2 solutions are protocols that run on top of the Ethereum mainnet, but use different consensus mechanisms or data availability schemes to achieve scalability. They aim to address the limitations of Ethereum’s current proof-of-work (PoW) system, which can only process about 15 transactions per second (TPS) and often suffers from network congestion and high gas costs.

Among the different types of layer 2 solutions, such as optimistic rollups, zk-rollups, sidechains, and plasma, the most popular one is Arbitrum, which accounts for 45.15% of the total L2 TVL with $13.39 billion. Arbitrum is an optimistic rollup that allows smart contracts to run on layer 2 with minimal changes, while providing security guarantees from the Ethereum mainnet. Arbitrum has attracted many prominent projects, such as Uniswap, Aave, Chainlink, and SushiSwap, to launch on its platform.

Source: L2Beat

Another notable layer 2 solution is Optimism, which is also an optimistic rollup that supports smart contracts and Ethereum compatibility. Optimism has a TVL of $7.61 billion, making it the second-largest layer 2 platform by TVL. Optimism is the preferred choice for some of the biggest DeFi protocols, such as Synthetix, MakerDAO, and Compound, as well as the leading NFT marketplace, OpenSea.

Other layer 2 solutions that have gained significant TVL in the past week include Manta Pacific, a sidechain that focuses on gaming and NFTs, with $1.91 billion; and StarkNet, a zk-rollup that leverages zero-knowledge proofs to enable scalable and privacy-preserving transactions, with US$1.35 billion.

The growth of layer 2 solutions is expected to continue, as more users and developers seek to benefit from the improved user experience and innovation potential that they offer. Moreover, the upcoming transition of Ethereum from PoW to proof-of-stake (PoS) in the next year will also create more opportunities and challenges for layer 2 platforms, as they will need to adapt to the new consensus model and interoperability standards.

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