The Ethereum main chain can hardly be used by normal mortals due to high transaction costs, that’s no secret. The applications of the DeFi and NFT world are the main responsible for the high costs.
On average, more than 500,000 crypto wallets interact with the Ethereum mainchain every day. This huge demand inevitably means that Ethereum transactions become very expensive. Therefore, for just one token swap on Uniswap, it is quite possible to pay between $23.30 and $24.56 for a single transaction confirmation.
When market volatility is high, these costs can be even higher. Although the Ethereum core developer community is constantly working to scale the mainchain, the high transaction costs should not change until Ethereum 2.0 and sharding are fully implemented.
Until the scalability of the Ethereum mainchain increases, various scaling solutions are trying to ease the Ethereum mainchain.
What is an Ethereum Layer 2 network?
The ETH-L2s basically work like cable cars or subways in big cities. They relieve the road network and work on the Ethereum network as layers where transactions are outsourced in various ways.
Technically, Ethereum Layer 2 networks can have different structures. Basically, they all have one goal: to outsource transactions from the Ethereum main chain. This makes it possible for ETH-L2 to effectively ease the main chain and allow users to make profitable transactions again.
The Ethereum scaling solutions that hold the most capital right now are Polygon ($5.17 billion), Arbitrum ($4.02 billion), dYdX ($985 million), and Optimism, according to DefiLlama ($ 604 million).
ETH-L2 hits a new all-time high
The persistently high utilization of the ETH network has resulted in the layer 2 ecosystem growing rapidly in recent months. For example, the value of digital assets in Arbitrum has grown from less than $50 million in September 2021 to more than $4.02 billion at press time.
Calculating the total value of equity held in ETH-L2 using data from DefiLama and L2BEAT, it now equates to over $12.43 billion, a new all-time high.
For comparison, according to DefiLama data, Avalanche’s blockchain is worth $11.39 billion, Solana’s is $7.92 billion, and Fantom’s is $7.61 billion. millions.
Of course, the Ethereum layer 2 ecosystem cannot be directly compared to other layer 1 blockchains. However, the comparison makes it clear how big ETH-L2 is now.
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