As an analyst with extensive experience in the blockchain and crypto industry, I firmly believe that the layer-2 (L2) ecosystem on Ethereum continues to thrive and outpace its competitors. Contrary to the bearish claims made by some, L2s are not only growing rapidly but also becoming increasingly ubiquitous within the Ethereum network.
As a researcher studying the Ethereum ecosystem, I’ve observed that the layer-2 solutions and Ethereum Virtual Machine (EVM) scaling platforms continue to expand at an impressive rate, defying some pessimistic predictions. This was expressed in a post on X by Ethereum community member Ryan Berckmans on June 26.
In reaction to a statement made by Rushi Manche, the founder of Movement Labs, that “ETH (EVM L2) scalability solutions will become worthless. Most of them underperform in comparison to Solana (SOL),” your comments ensued.
Berckmans replied, “The L2 (Layer 2) ecosystem is continuing to expand at an astonishing rate.” He supported his claim by mentioning analytics tools like L2beat. Furthermore, he pointed out that companies such as Coinbase, Worldcoin, and Immutable X have also developed Ethereum Virtual Machine (EVM) Layer 2 solutions.
Layer-2 Growth Impressive
He emphasized that layer-2 solutions are more than just scaling alternatives on Ethereum; they’re essential components. Furthermore, he contended that these L2 solutions provide greater value on the second-largest blockchain compared to other layer-1 networks because of Ethereum’s reputation for neutrality as a foundational layer.
Additionally, Ethereum’s ecosystem outshines its competitors with a greater size and variety. It boasts more extensive liquidity, established protocols, and a higher total value secured in smart contracts. This contradicts Manche’s stance that Solana is superior.
As an analyst, I strongly believe that those betting against L2s (Layer 2 solutions) and Ethereum Virtual Machine (EVM) are taking a significant risk. In my opinion, they are likely to suffer major losses.
— Ryan Berckmans ryanb.eth (@ryanberckmans) June 26, 2024
According to Berckmans’ forecast, L2s (Layer 2 solutions) are expected to outpace Solana’s transaction processing capacity substantially in the near future.
“Irrespective of a specific L2 (Layer 2) platform, the collective transaction throughput (transactions per second, or tps) of the entire L2 ecosystem is expected to significantly outpace Solana’s tps within the next five years, by approximately 100 times.”
He further emphasized that Ethereum’s advanced features, including security and decentralization, make it a more alluring choice for businesses and governments. He introduced the concept of a “network effect of settlement” for Ethereum, which refers to how the expanding community of layer-2 protocols enhances the advantages and decreases the expenses when transacting on Ethereum.
According to Berckmans’ interpretation, Manche’s remarks may give the impression that EVM L2 solutions have ceased to exist and that L2s in general are not worth considering. However, this is not accurate as both statements are incorrect.
As an analyst, I’ve observed some noteworthy developments in the Ethereum ecosystem. Specifically, Ethereum’s Layer 2 (L2) solutions have been exceptionally successful, outperforming other competitors. Among these solutions, EVM (Ethereum Virtual Machine) has emerged as a clear frontrunner.
L2 Ecosystem Outlook
As an analyst, I’ve examined the data from L2beat and found that the total value locked in L2 protocols amounts to a staggering $42.86 billion as of now. Surprisingly, this figure has remained unchanged since March, even though the crypto market has experienced a downturn of approximately 18% during the same period. Intriguingly, if we compare this to the figures from last year, there’s been a significant increase of nearly 280%.
Among L2 platforms, Arbitrum One holds the largest position with a total value locked (TVL) of approximately $17 billion and a market share close to 40%. Coinbase Base follows in second place with around $7.3 billion TVL and a 17% market share. OP Mainnet ranks third, boasting a TVL of about $6.4 billion and a 15% market share.
The number of protocols listed by L2beat has grown to 58, signifying significant expansion in the ecosystem compared to the fewer options available just over a year ago.
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2024-06-28 01:15