Ethereum Layer 2 Soars to $5B in Locked Worth. Right here’s Why 

Key Takeaways

  • Ethereum’s Layer 2 networks have cumulatively surpassed $5 billion in complete worth locked.
  • Optimistic Rollup options Arbitrum One and Optimism account for over 80% of the locked worth.
  • zkSync, which is about to launch its mainnet 2.0 on Friday, has additionally seen its complete worth locked enhance 19% this week.

Arbitrum at the moment holds greater than half of all the whole worth locked on Layer 2. 

Inside Ethereum Layer 2 

Ethereum’s Layer 2 ecosystem is on the rise. 

Per L2Beat knowledge, the whole worth locked throughout the high good contract blockchain’s Layer 2 scaling networks topped $5 billion Wednesday, posting a 9.2% rise over the previous week. The overall worth locked on Ethereum Layer 2 is at the moment about $5.09 billion. 

The bounce in locked worth comes amid a interval of bullish momentum within the cryptocurrency market. Amid the bounce, ETH has gained nearly 20% in market worth over the previous week, at the moment buying and selling at about $1,540. ETH is broadly used as Ethereum’s Layer 2 base asset, so its rise goes some technique to explaining the rise within the complete worth locked. 

ETH/USD chart (Supply: CoinGecko)

Arbitrum One and Optimism, two Optimistic Rollup options that collectively account for over 80% of the worth locked on Layer 2, have respectively seen rises of 9.3% and 10.3% in complete locked worth. Arbitrum One at the moment holds round $2.59 billion, over half of the locked worth on Layer 2. 

Nonetheless, whereas the ETH upswing has helped Layer 2’s locked worth surge to a brand new all-time excessive, it’s not the one issue behind the rise. This week is a significant one for the Layer 2 ecosystem as zkSync is about to launch its new product, zkSync 2.0, on mainnet Friday. In consequence, capital has flooded over to the zkSync protocol, up round 19% this week. zkSync is a ZK-Rollup answer and has thus far seen slower progress than its main Optimistic Rollup counterparts, however the challenge is hoping that tomorrow’s launch will give the community a lift. 

ZK-Rollups and Optimistic Rollups 

ZK-Rollups use zero-knowledge proofs to bundle transactions and scale back the quantity of information required to validate transactions on Ethereum mainnet, in flip providing sooner transaction speeds and cheaper charges. Not like Optimistic Rollups, they don’t require a prolonged dispute interval to keep up safety (it takes a few week to ship funds from Arbitrum One again to Ethereum mainnet, for instance). Although Optimistic Rollups are at the moment main Ethereum’s Layer 2 race, ZK-Rollups have lengthy been touted because the know-how that might assist Ethereum put together for mass adoption. Ethereum creator Vitalik Buterin has mentioned them at size, arguing at this month’s Devcon convention that they may very well be “at the very least as vital to know-how as blockchains.”

Curiously, although the whole worth locked on Layer 2 is down from its April 2022 peak in greenback phrases, when it topped $7.4 billion, the quantity of ETH within the ecosystem is now greater. Per L2Beat knowledge, the present complete worth locked is the equal of round 3.25 million ETH after a gradual rise over the previous 12 months. 

The overall variety of ETH locked on Ethereum Layer 2 (Supply: L2Beat)

Whereas the Ethereum Merge was the second-biggest blockchain’s most highly-anticipated replace this 12 months, Ethereum lovers have lengthy hoped that Layer 2 progress will assist the ecosystem hit mass adoption by decreasing prices and making the community extra accessible. Whereas Ethereum mainnet nonetheless holds the majority of all of the capital within the crypto ecosystem with slightly below $32 billion locked, Layer 2 seems to be catching up quick. 

Disclosure: On the time of penning this piece, the writer owned ETH and a number of other different crypto belongings. 

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Bitcoin (BTC) $ 17,025.95
Ethereum (ETH) $ 1,258.61
Tether (USDT) $ 1.00
BNB (BNB) $ 291.99
USD Coin (USDC) $ 1.00
Binance USD (BUSD) $ 1.00
XRP (XRP) $ 0.392801
Dogecoin (DOGE) $ 0.104295
Cardano (ADA) $ 0.321750
Polygon (MATIC) $ 0.917389