Ethereum Scaling via L2s

Ethereum Scaling via L2s

June 22, 2024

Overview

Ethereum's Layer-2 networks like Arbitrum and Optimism enhance scalability and reduce fees by processing transactions off-chain, with Arbitrum having a TVL of $2.88 billion, 1 million daily users, and 27.35 TPS, while Optimism has a TVL of $700 million, 175k daily users, and 7.25 TPS.

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Ethereum, the leading blockchain for decentralized applications, often faces challenges with scalability and high transaction fees. Layer-2 (L2) networks offer a solution by processing transactions off the main Ethereum chain, improving efficiency and reducing transaction costs. 

Why are Ethereum Layer-2 Networks good?

Scalability: Layer-2 networks handle transactions off-chain, significantly increasing the number of transactions per second (TPS) compared to the main Ethereum chain. 

Transaction Fees: By moving transactions off the main Ethereum chain, L2 networks drastically reduce gas fees, making Ethereum more accessible and affordable for everyday users and developers.

User Experience: Faster transactions and lower costs lead to a more user-friendly experience, encouraging more people to use Ethereum-based applications and services.

Security: L2 solutions remain secure due to their anchor to the main chain, ensuring that transactions are secure and verifiable.

Main Layer-2s: Arbitrum and Optimism

Arbitrum is one of the largest blockchain platforms for developing decentralized applications (dApps). Arbitrum moves the majority of ETH’s transactions to its layer 2 network through the use of rollups, resulting in faster transaction confirmations and lower fees.

Optimism is another L2 blockchain on the Ethereum network that uses the Optimistic Rollup solution to improve scaling. Like Arbitrum, transactions on Optimism are rolled up into batches, which are then relayed to the main network of the Ethereum blockchain, where only the overall state of the blocks are recorded.

Arbitrum Stats (As of June 22):

  • Total Value Locked (TVL): ~$2.88 billion

  • Amount of Apps: 238 above $100k in TVL

  • Users: ~1 million (daily active), 8.62 million (monthly active)

  • Transactions per Second (TPS): 27.35 tps (real-time)

Optimism Stats (As of June 22):

  • Total Value Locked (TVL): ~$700 million

  • Amount of Apps: 96 above $100k in TVL 

  • Users: ~175k (daily active), ~1.89 million (monthly active)

  • Transactions per Second (TPS): 7.25 tps (real-time)

Disclaimer: The information provided in this research paper is for educational and informational purposes only. It does not constitute financial advice, investment guidance, or any solicitation to buy or sell financial instruments. The views expressed herein are those of the authors and do not necessarily reflect the opinions of Kollectiv.

2024