Ethereum Layer 2 Total Value Locked Reaches $51 Billion in 2024
The Ethereum ecosystem has demonstrated significant performance improvements, attributed largely to Layer 2 platforms. The cumulative total value locked (TVL) in these platforms increased by 205% year-to-date, reaching a record high of $51 billion, indicating strong growth and investor interest in Ethereum-native assets.
In November 2023, the Ethereum Layer-2 TVL was $16.6 billion, which has now surged to over $51 billion according to data from L2BEATS.
-
Courtesy: L2BEAT
Ethereum Layer 2 solutions enhance network scalability by offloading transactions to secondary chains. This approach reduces congestion on the Ethereum mainnet, decreases wait times, and lowers transaction costs. However, some experts caution that these Layer 2 solutions may negatively impact revenue for the Ethereum mainnet and limit Ether's price growth.
Top Two Ethereum Layer Networks: Arbitrum and Base
Arbitrum and Base are the leading contributors to the Ethereum Layer 2 TVL. Arbitrum holds more than $18.3 billion in TVL, accounting for approximately 35% of the total. Base is the second-largest network with a TVL of $11.4 billion, representing 22% of the cumulative Layer 2 TVL. In the week leading up to November 28, Arbitrum’s TVL increased by over 12%, while Base saw an 11.4% rise.
On November 26, Base achieved a record 106 transactions per second (TPS) as its TVL exceeded $10 billion for the first time, surpassing 1 billion total transactions, driven by the current memecoin trend.
Impact of Dencun Upgrade on Layer 2 Fee Stabilization
Following the Ethereum Merge in 2022, the network underwent a major upgrade called Dencun in March 2024. Nick Dodson, co-founder and CEO of Fuel Labs, emphasized that this upgrade contributed to fee stabilization across Layer 2 networks rather than merely reducing fees. Several Layer 2 networks, including Starknet, Optimism, Base, and Zora OP Mainnet, reported a 99% reduction in median transaction fees post-upgrade.
The open interest in CME's ether futures has nearly doubled since the election.
All-time highs by a wide margin, with futures premiums trailing above BTC for the past few days. pic.twitter.com/sV0Myo6VWE
— Vetle Lunde (@VetleLunde) November 25, 2024
The Ethereum price is showing resilience, recovering over 15% from lows of $3,000. Additionally, Ethereum futures open interest on the CME exchange has reached a new all-time high, reflecting bullish sentiment among investors. The next key milestone for ETH is projected at $4,000 before potentially setting a new all-time high.