The total value locked (TVL) on ethereum layer 2 networks recently hit a new all-time high in January, a testament to the continued adoption of ethereum. Layer 2 networks sit on top of the ethereum blockchain and help scale it by processing off-chain transactions before sending data to the main blockchain.
According to data from L2BEATa Layer 2 analytics platform, the TVL of these scaling solutions recently hit an all-time high of $21.16 billion, representing 340% growth from the same day last year.
ethereum Layer-2 networks reach new milestone
2023 was a big year for ethereum as the altcoin and its scaling solutions saw a steady rise in TVL despite strong competition from other networks such as Solana and Cardano. L2Beat data shows that the TVL of these scaling solutions started in 2023 at $4.81 billion, but grew steadily to end the year at $19.98 billion, a growth of 315%.
This growth was particularly exacerbated in the last quarter of 2023 and continued in 2024. TVL grew by $1.18 billion in the first three days of January to reach $21.16 on January 3, its current all-time high.
At the time of writing, TVL now stands at $20.41 billion, up 3.82% over the past seven days. A large fraction of this layer 2 TVL can be attributed to Decision oneand the scaling solution currently has $10.05 billion worth of cryptocurrencies locked.
ON the main network, formerly called Optimism, is in second place with a current TVL of $5.84 billion. 57% of this TVL is made up of OP tokens, compared to Arbitrum One, whose ARB token makes up only 36% of the TVL.
<img decoding="async" class="aligncenter size-medium" src="https://www.tradingview.com/x/VEiLxJuU/" alt="Tradingview.com ethereum Price Chart (Layer 2 Networks)” width=”3266″ height=”1530″ loading=”lazy”/>
eth price holds $2,200 | Source: ETHUSD on Tradingview.com
eth network status
This massive growth shows that ethereum users are flocking to Layer 2 networks to escape high gas fees and congestion on the mainnet. ethereum's TVL also saw steady growth throughout the year, totaling $7.6 billion in the final quarter of 2023. Data from DeFiLlama shows that the TVL on ethereum is now at $28.532 billion.
However, ethereum has seen its daily active addresses and transaction count drop in recent months. Data of Sagebrush revealed that Solana and Sui are currently outperforming the network in terms of daily transaction count. Recent Solana Competition prompted an analyst to ethereum-not-increasing-gas-limit-digging-own-grave/” rel=”nofollow”>describe ethereal like digging your own grave by relying too much on your layer 2 networks for scalability.
Some layer 2 chains also currently process more transactions than ethereum itself. L2BEAT places monthly transactions on zkSync Era and Decision with 39.91 million and 35.54 million respectively, ahead of ethereum's count of 33.91 million transactions.
Featured image from Yahoo Finance, chart from Tradingview.com
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