- Ethereum Layer 2 chains have seen a spike in the total value of assets locked in the past thirty days.
- The upcoming Dencun upgrade includes EIP-4844, which is key to cost reduction for Layer 2 chains.
- Partnerships and Ethereum ecosystem upgrades are likely drivers of the Layer 2 narrative in Q1 2024.
Ethereum ecosystem’s scaling solutions, Layer 2 chains, have observed a steady increase in their transaction volume since the beginning of the year. The rising relevance and utility of these Layer 2 chains can be attributed to the upcoming transaction cost decline with the Ethereum ecosystem upgrade and the rising number of relevant partnerships.
Also read: Polygon unveils AggLayer: A solution to long-standing Ethereum Layer 2 challenges
Ethereum Layer 2 chains see spikes in transaction volume and TVL
The Total Value Locked (TVL) of assets in zkSync, an Ethereum Layer 2 chain, is approaching 750 million. The metric has been in an uptrend in the past 30 days and despite a small decrease in the past 24 hours, the uptrend is consistent.
Other Layer 2 chains, including Polygon, Arbitrum and Optimism, among others, have observed a similar trend of TVL increase in the same timeframe.
zkSync Daily TVL. Source: TokenTerminal
The rising TVL is a sign of higher adoption and utility of the Layer 2 chains. The likely driver of these gains is the upcoming Ethereum upgrade, Dencun. The upgrade is packed with various Ethereum Improvement Proposals (EIPS), of which EIP-4844 (also known as proto-danksharding) is key to Layer 2 protocols.
EIP-4844 is expected to introduce “blobs” that reduce the storage burden on the Ethereum mainnet and make fees cheaper for rollups and Layer 2 chains. Dencun upgrade goes live on March 13.
The second catalyst that has sparked the 91% increase in Layer 2 transaction volumes is the partnerships by L2 projects.
Ethereum Layer 2 transaction volumes. Source: IntoTheBlock
Arbitrum recently announced a long-term partnership with Robinhood. This is expected to broaden ARB users’ access to the Web3 ecosystem and onboard Robinhood users, offering them a feature to swap their tokens on Arbitrum-based DEXes.
We’re very excited to announce a long-term collaboration with @RobinhoodApp that will encompass features dedicated to lowering the barrier for onboarding new users into Web3 through #RobinhoodWallet https://t.co/m4s1cjWbKt
— Arbitrum (,) (@arbitrum) February 29, 2024
Another key L2, Metis has announced its strategic partnerships with Chainlink, Eigen Layer, Renzo Protocol and DeFi Kingdoms. These partnerships are focused on making Metis a self-sustainable Layer 2 chain.
We’re very excited to announce a long-term collaboration with @RobinhoodApp that will encompass features dedicated to lowering the barrier for onboarding new users into Web3 through #RobinhoodWallet https://t.co/m4s1cjWbKt
— Arbitrum (,) (@arbitrum) February 29, 2024
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Polygon joins forces with WSPN to expand stablecoin adoption
WSPN, a stablecoin infrastructure company based in Singapore, has teamed up with Polygon Labs to make its stablecoin, WUSD, more useful in payment and decentralized finance.
Coinbase envisages listing of more meme coins amid regulatory optimism
Donald Trump's expected return to the White House creates excitement in the cryptocurrency sector, especially at Coinbase, the largest US-based crypto exchange. The platform is optimistic that the new administration will focus on regulatory clarity, which could lead to more token listings, including popular meme coins.
Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B
As Bitcoin (BTC) gets closer to the $100,000 mark for the first time — it crossed $99,000 earlier Friday — capital is rotating into alternative cryptocurrencies, creating a buzz in the broader crypto market.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: Rally expected to continue as BTC nears $100K
Bitcoin (BTC) reached a new all-time high of $99,419, just inches away from the $100K milestone and has rallied over 9% so far this week. This bullish momentum was supported by the rising Bitcoin spot Exchange Traded Funds (ETF), which accounted for over $2.8 billion inflow until Thursday. BlackRock and Grayscale’s recent launch of the Bitcoin ETF options also fueled the rally this week.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.