In the realm of blockchain technology, Ethereum has been making substantial strides, specifically through the integration of layer 2 networks. These developments reached significant heights in the third quarter of 2023, as reported by blockchain intelligence firm, Messari. Surprisingly, layer 2 solutions encompassed 61% of the entirety of Ethereum‘s (ETH) transactions in this period, marking a fundamental shift in industry practices.
Essentially, layer 2 solutions are auxiliary networks that work in conjunction with Ethereum’s mainnet to better support developers. There has been an increasing demand for such enhancements, primarily due to the traffic congestion on Ethereum, thus necessitating optimized scalability, lowered fees, and broader use case possibilities.
Instances like Base and Friend.tech serve as cogent examples of layer 2 solutions grabbing the limelight in the blockchain sphere. Since its inaugural launch in August, Base’s effectiveness with growing transactions has been noteworthy. It significantly exceeded expectations, clocking in more activity than the mainnet at a particular juncture. Encapsulating $442 million in total value locked (TVL) within a few months, it has firmly positioned itself among the top four layer 2 solutions.
Yet, Base stands out from its counterparts due to its unique utility. Crafted specifically for developers, it lacks a native token, a conscious choice made to prevent unnecessary distractions that may derail network enhancement.
Accompanying Base in the layer 2 field is Friend.tech, a platform powered by social tokens. It has made remarkable headway, clocking substantial figures in revenue within a limited span.
Indeed, while Arbitrum has held its position at the forefront of Ethereum’s layer 2 networks, Base and Optimism have managed to seize a considerable market share, amounting to 36% collectively. Even though the TVL of Arbitrum and Optimism hover at $4.2 billion and $1.27 billion, respectively, they demonstrate an enthusiastic drive to engage their communities and attract more projects.
However, despite the promising progress of these solutions, Messari’s analysts underscore caution, as the market still casts a shadow of uncertainty. In light of this, a nuanced perspective would suggest not to undermine the bearish inclinations of the market.
In summary, the last quarter witnessed Ethereum outpacing Bitcoin by a small margin in price growth, albeit its market capitalization retreated by 10%. Long story short, the era of layer 2 networks is upon us, with each one carving its path towards future encounters.
Source: Cryptonews
