Data Suggests Ethereum Layer-2 Tokens May Experience Explosive Upside

Jake Simmons

Last Updated: June 11, 2024 9:56 am

2 mins read

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While the Ethereum network and its users continue to suffer from the high fees of the layer-1 blockchain, various layer-2 (L2) solutions are stepping into the spotlight to solve the problem.

As analyst Miles Deutscher explained, citing data from Dune Analytics, layer-2 scaling solutions saw monumental growth in 2022. “I expect this trend to continue in 2023 and beyond,” Deutscher commented.

Ethereum gas L2 — Ethereum gas spent to settle L2 transactions. Source: Twitter

Blockchain analytics firm Nansen also released data today showing the growth of layer-2 solutions. Specifically, Nansen referred to Abritrum.

“Arbitrum season is in full swing,” wrote a researcher at Nansen. According to their data, transactions on L2s are increasing significantly, while transactions on Ethereum are decreasing. A clear divergence can be seen.

Regarding Arbitrum, the Nansen researcher writes that the number of daily active addresses averaged 50,000 to 70,000 in November and December. A few months ago, from July to September, the average was 15,000 to 20,000.

With the recent Nitro upgrade, Arbitrum has once again massively lowered its average gas price for a transaction. While the average fee was $0.35 before Nitro, it has dropped to $0.08 afterwards. This represents a reduction of almost 75%.

However, although Arbitrum’s network usage is skyrocketing, there is no token yet. So far, there is also a lack of an official announcement regarding an Arbitrum token.

Rumors have it that Arbitrum will launch its token by the first quarter of 2023 at the latest. The ticker is supposed to be either ARBI or ARB.

The Leading Ethereum L2 Solution

As NewsBTC reported yesterday, Polygon (MATIC) currently holds the leading position when it comes to successful Ethereum L2 tokens. The project has entered partnerships with major brands such as Starbucks, Mercedes, Meta, Reddit, eBay, Disney, and Adobe, among others.

Sandeep Nailwal, co-founder of Polygon, revealed yesterday that the zkEVM mainnet “is coming soon”. With the implementation, Polygon will reach a massive milestone.

Once the zkEVM mainnet comes online, there could be an explosion of dApps on Polygon. Zero-knowledge cryptography will enable privacy and minimize data volumes to make transactions for smart contracts even more efficient.

BitDAO And Optimism

Another emerging L2 project is BitDAO, which is backed by the exchange Bybit. About a week ago, the project had announced the soft launch of Mantle, a modular Ethereum Layer-2 solution with separate execution, finality and data availability layers.

A public test network is scheduled to go live in 2023. It will serve as the core of BitDAO and use BIT as a token.

Optimism also has a token. The L2 Ethereum scaling solution was first introduced in June 2019, and the public mainnet was launched in December 2021.

The OP token’s airdrop took place in June 2022, with nearly 249,000 registered Optimism users receiving the newly launched token. Remarkably, the project’s mainnet is currently hosting the largest decentralized exchange, Uniswap V3.

At press time, the ETH price was sitting just above crucial support in the 4-hour chart.

Ethereum ETH USD 2022-12-08 — ETH price, 4-hour chart. Source: TradingView

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

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For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

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