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Ethereum Layer 2 Race Comfortably Led by Arbitrum with Nearly 50% Market Share

Last Updated April 8, 2024 3:29 PM
Shraddha Sharma
Last Updated April 8, 2024 3:29 PM

Key Takeaways

  • Arbitrum dominates Ethereum Layer 2 solutions with nearly half of the market share.
  • Coinbase’s Base leads in the number of transactions after the Dencun Upgrade.
  • Layer 2 networks have seen a rise in transaction speed and a decrease in fees since the Ethereum upgrade.

L2 TVL Surpasses $43B

Ethereum’s Layer 2 solutions are platforms built on top of the Ethereum blockchain to increase transaction speed and reduce costs.L2s alleviate congestion on Ethereum with the recent Dencun upgrade cutting down the cost of doing that. The Total Value Locked refers to the total amount of assets deposited while indicating adoption.

At the time of writing, the collective value locked in Layer 2 solutions is over $43b, with a 2% weekly increase. Arbitrum One, OP Mainnet, and Base are the top contenders, each employing Optimistic Rollup technology.

Ethereum L2 Activity | Source: L2Beat
Ethereum L2 Activity | Source: L2Beat

Arbitrum One, with its Optimistic Rollup project, has taken a comfortable lead in TVL among Ethereum Layer 2’s. It boasts a market share of 45.10% and a total value locked (TVL) of $19.51b as per L2Beat . $11b of its TVL is attributed to canonically bridged assets.

Arbitrum One is followed by OP Mainnet with an 18.40% market share with a TVL of $7.93b. Base stands 3rd with a 10.16% market share and a TVL of $4.38b. Base exhibited a growth of around 21% and crossed the TVL of $4b for the first time. Blast stands in fourth place with a 6.77% market share.

Impact of the Ethereum Dencun Upgrade

The Ethereum network underwent dubbed Dencun, which notable impact on Layer 2 solutions. CCN analysis found the upgrade a success as post-upgrade fees have seen a reduction with a boost in transactions. The Layer 2 ecosystem now averages over 124 transactions per second. Arbitrum, Base, and Optimism have seen increased activity, with Base in the lead. According to IntoTheBlock, the on-chain activity reached a record peak of 32m transactions per week after the upgrade.

Base’s daily transactions per second (TPS) stand at 36.05, contributing to a 30-day transaction count of 50.5m. The daily TPS of Arbitrum One is 19.13. Over the last 30 days, it has handled 40.17m transactions.

OP Mainnet shows a daily TPS of 6.76 and has seen 18.81m transactions over the past month.

However, contrary to the support, there is criticism by Cyber Capital Founder Justin Bons. He recently criticized Ethereum’s approach to handling the capacity of its network. In his view , by not expanding the capabilities of the L1 Ethereum blockchain, the developers are giving up on solving Ethereum’s scalability problem. He says that they are relying on L2 solutions to manage the load.

Base Leads in Transactions, Arbitrum One in Market Share

Ethereum continues to upgrade with Layer 2 solutions like Arbitrum, Base, and Optimism driving its expansion and the broader adoption. Arbitrum leads the pack in market share while Base has shown growth, leading in transaction count.

Meanwhile, Ethereum’s Dencun upgrade has been tagged a success based on the L2 fee reduction and increase in transaction count. However, criticism has erupted on Ethereum’s reliance on L2’s to alleviate its load. 


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