Ethereum’s Layer-2 Networks Soar to New Heights with $51.5 Billion in TVL

Ethereum’s layer-2 (L2) networks are experiencing substantial growth, with a surge in value that highlights increasing interest in Ethereum-based assets.

Recently, these L2 solutions reached a new high, with a total value locked (TVL) exceeding $51.5 billion, marking a significant 205% rise from $16.6 billion in November 2023.

L2 networks play a critical role in enhancing Ethereum’s scalability by offloading transaction processing from the mainnet, reducing both costs and waiting times for users. Despite their advantages, there are concerns within the industry that L2s could potentially impact the Ethereum mainnet’s revenue, which could, in turn, influence the price of Ethereum (ETH).

The rise in L2 TVL is largely driven by Arbitrum One and Base, the leading networks in this space. Arbitrum currently holds the largest share, with $18.3 billion in TVL, making up 35% of the total L2 ecosystem. Base, the second-largest, has $11.4 billion, which represents just over 22% of the overall TVL. Both networks have seen steady growth, with Arbitrum increasing by more than 12% and Base rising over 11.4% in the past week.

Base recently achieved a milestone, surpassing 106 transactions per second (TPS) on November 26 and crossing 1 billion transactions, driven by the ongoing memecoin craze. The Dencun upgrade in March, the most significant update to Ethereum since the Merge, also contributed to the L2 ecosystem’s growth. It provided enhanced fee stabilization, helping networks like Starknet, Optimism, and Zora OP mainnet reduce transaction fees by as much as 99%.