How L2 chains boosted Ethereum’s user base

Journalist

Posted: February 11, 2024

• Scaling solutions handled 5.17x more transactions than the base layer in the last seven days.
• The TVL on ETH L2s jumped fourfold over the last year.

The Ethereum [ETH] layer-2 (L2) landscape has expanded by leaps and bounds in the past year.

The blockspace’s demand for scaling solutions has hit the roof, with users onboarding to capitalize on its relative advantages.

L2s attract users to the Ethereum ecosystem

According to a recent post by on-chain analytics firm Token Terminal, top ETH scaling solutions catered to nine million monthly active users, representing a massive 9x jump from last year.

If you’re building on @ethereum today, you’re building for ~10m monthly active users: pic.twitter.com/KhooMC1pvT

— Token Terminal (@tokenterminal) February 10, 2024

It was interesting to observe that this exponential growth came during the bear market, the period when on-chain activity across major L1s stagnated.

L2 solutions, built atop the base layer of Ethereum, were projected to be the answer to the scalability question.

It was planned that over time, these L2s would handle the majority of low-value transactions, with the base layer taking care of security and decentralization.

This disruptive vision, which had been slow to take hold at first, was finally paying off.

L2s clock 5x more transactions than mainnet

According to AMBCrypto’s analysis of L2Beat data, the aggregated average transactions per second (TPS) across L2 blockchains was found to be 47.37 as of this writing, compared to mainnet’s figure of just 11.70.

In fact, scaling solutions handled 5.17x more transactions than the base layer in the last seven days.

Source: L2Beat

The twin advantages of higher transaction throughput and lower fees have also attracted many decentralized applications (dApps) towards ETH scaling solutions.

In turn, this has resulted in significant capital infusion.

ETH L2s become DeFi hubs

As of this writing, more than $23 billion was locked into L2 chains, AMBCrypto observed using L2Beats data. This marked a nearly fourfold jump from last year.

While this was still lower than Ethereum’s total value locked (TVL) of $39.41 billion, the impressive growth trajectory reflected growing demand for L2s.

That the expanding L2 sector would inject positive momentum into the price of ETH was a no-brainer. Users on all scaling solutions pay transaction fees in ETH.

Source: L2Beat

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Hence, the higher the demand for L2 blockspace, the higher will be the demand for ETH coins.

As of this writing, the second-largest cryptocurrency was exchanging hands at $2553, with double-digit weekly gains of 10%, according to CoinMarketCap.