- Ethereum Layer-2 cumulative TVL surges by over 205% in the past year, reaching $51.5 billion.
- Arbitrum and Base lead the TVL growth, accounting for over 57% of total Layer-2 value.
- Ethereum’s Dencun upgrade stabilized Layer-2 fees, reducing transaction costs by up to 99% in some cases.
Ethereum Layer-2 (L2) networks have hit a new milestone, surpassing $51.5 billion in cumulative total value locked (TVL). This marks an over 205% increase from the $16.6 billion recorded in November 2023, according to data from L2beat.
Layer-2 solutions are crucial for improving Ethereum’s scalability. By processing transactions on secondary chains, these solutions help reduce costs and improve transaction speeds, addressing the limitations of the Ethereum mainnet.
Arbitrum and Base Drive Layer-2 Growth
Two Layer-2 platforms, Arbitrum and Base, contributed significantly to the ecosystem’s growth. Arbitrum remains the largest L2 network, holding over $18.3 billion in TVL, or 35% of the total value. Base, the second-largest network, manages $11.4 billion in TVL, representing 22% of the cumulative total.
Recent activity highlights the platforms’ growth. Base achieved over 106 transactions per second on November 26 and surpassed $10 billion in TVL for the first time. The platform also recently crossed 1 billion total transactions, bolstered by increased activity during the current memecoin surge.
Despite these achievements, some experts have raised concerns about liquidity fragmentation among decentralized finance (DeFi) protocols on Layer-2 solutions. Alvin Kan, COO of Bitget Wallet, pointed out that competition for liquidity and the use of cross-chain bridges could introduce security risks.
Dencun Upgrade Boosts Layer-2 Fee Stabilization
Ethereum’s Dencun upgrade, launched in March, has also played a significant role in the Layer-2 ecosystem’s growth. The upgrade expanded network capacity and helped stabilize transaction fees for L2 networks.
Nick Dodson, CEO of Fuel Labs, emphasized that the upgrade is more about improving capacity and stabilizing costs rather than drastically lowering fees. Median transaction fees on Layer-2 solutions like Starknet, Optimism, and Base saw reductions of up to 99% after the upgrade.
Ethereum’s Layer-2 networks continue to evolve, drawing more interest from investors and developers. With ongoing innovations and platform upgrades, these networks are expected to remain a key driver of growth in the Ethereum ecosystem.
