A handful of Ethereum-based layer-2 projects have been on a tear in the past week, with some of the sector’s associated token prices now up considerably in year-to-date (YTD) terms.
Traders are now speculating on a March launch of the next major Ethereum upgrade, dubbed Shanghai, which would enable the withdrawal of staked ether from validators, a planned change that has been anticipated move from industry participants since the Merge.
“Volatility has been at its lowest in the crypto market in the past weeks,” David Cicoria, head of quantitative development at crypto custodian Hex Trust, told Blockworks. “This coupled with the announcement of lower interest rates, Ethereum’s upcoming Shanghai upgrade, and FOMO from some investors has pushed prices up for layer-2 tokens.”
As such, several projects built around Ethereum are posting double-digit gains including the open protocol — aimed at decentralized exchange order books — Loopring whose token, LRC, is up more than 18% YTD.
Optimism, an EVM-compatible optimistic rollup chain that batch transactions before settling to Ethereum’s mainnet, has seen its OP token rise more than 25% over the same period. Daily transactions for the network hit an all-time high on Monday, etching just below 700,000.
Rival optimistic rollup Arbitrum’s daily transaction count has been ranging between 200,000 and 400,000, per data from Nansen.
Ethereum liquid staking solution Lido DAO’s token, LDO, is also up an eye-watering 80% since the new year and has continued to post considerable gains in the past week, clocking a 65% gain when viewed over a seven-day period. The project now stands as a top contender for total value locked at $6.5 billion, DeFiLlama data show.
And layer-2 scaling solution designed for NFTs using zero-knowledge rollup (zk-rollup) technology, Immutable X, is flashing 23% gains on its token since the new year began.
The sector seeks to increase the value of Ethereum and related networks by reducing fees, improving scalability and bolstering transaction throughput — often a gripe levied at blockchain infrastructure that optimizes for security and decentralization.
It comes as digital assets have continued to struggle under the weight of an industry-wide blowout courtesy of FTX in the fourth quarter of 2022, as well as recent questions hanging over Digital Currency Group and its subsidiaries.
The spot market for most digital assets also experienced a brief reprieve on Monday, sending the price of bitcoin higher on the day, establishing itself above the pivotal $17,000 level.
None of this impresses Bitcoin maximalists like Samson Mow, Founder and CEO of Pixelmatic, who instead anticipate a market rebound to finally take shape courtesy of bitcoin’s next halving event.
“Ethereum and its layer two tokens are created and tweaked to bring hype and price movement to satiate high-time preference speculators,” Mow told Blockworks. “None of it is very interesting to Bitcoiners.”
Cicoria also remains skeptical of the latest upturn: “The crypto market remains fragile, with a lot of unknowns still to consider.”
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Source: https://blockworks.co/news/ethereum-layer-2-token-prices-up-double-digits-this-year