Ethereum L2 Ecosystem Surpasses Non-Ethereum Blockchains
Ethereum L2s Surpass Non-Ethereum Blockchains
Ethereum's Layer 2 (L2) networks have reached a significant milestone, surpassing all non-Ethereum blockchains in total value locked (TVL). As of early 2024, these Ethereum-based L2 protocols have amassed $20.7 billion, outpacing the $19.6 billion held by other blockchains. This marks a notable "L2-over-L1" flippening, highlighting the growing influence of Ethereum's L2 solutions.
Metrics and Comparisons
The metrics for Ethereum L2s and non-Ethereum blockchains are distinct. L2 metrics encompass the total assets on these networks, including native tokens, while L1 metrics consider the assets locked within decentralized applications (dApps). This difference is crucial for understanding the scale and impact of the L2 ecosystem's growth.
Historical Perspective
Back in September 2021, predictions about this flippening varied. While some believed it could happen by 2022, a notable 20% doubted it would ever occur. At that time, the L2 ecosystem was significantly smaller, about 20 times less than L1s. This disparity widened during the crypto winter, particularly after the Terra/Luna collapse in early 2022.
Arbitrum's Growing Dominance
The Ethereum L2 ecosystem's surge in TVL was led by Arbitrum (ARB), which is approaching a 50% dominance within the sector. Despite a temporary decline, Arbitrum is regaining its position as the leading L2 network. Other key players include OP Mainnet (Optimism), Base, Metis Andromeda, and Manta Pacific, which collectively account for over 90% of the L2 TVL.
The significant growth in Ethereum's L2 networks underscores their increasing relevance and the shifting dynamics within the blockchain industry. As these networks continue to evolve, they play a crucial role in enhancing Ethereum's scalability and functionality.
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