Evolution of the Landscape of Ethereum L2 and Public Chains

The current data trends and the development direction of Ethereum technology are worth paying attention to.

1. The total locked value of DeFi ( TVL ) and trading volume

The TVL rankings of Arbitrum and Optimism have gradually entered the top ten from outside the top ten. In terms of DeFi TVL, Arbitrum ranks fifth, only behind Ethereum, BSC, Tron, and Polygon, surpassing Avalanche, Solana, and others. Optimism ranks eighth, also surpassing most public chains.

From the perspective of 24-hour DeFi trading volume, Arbitrum ranks third, while Optimism ranks fifth. Arbitrum comes only after Ethereum and BSC, surpassing most public chains. Optimism ranks just below Ethereum, BSC, and Polygon, also exceeding the vast majority of public chains. DeFi trading volume reflects the activity level of the chain to some extent.

2. Development of Ecological Projects

L2(Arbitrum and Optimism have a complete range of DeFi, NFT, and GameFi projects, and some major DeFi protocols originally on L1, such as Aave, Uniswap, Synthetix, and Perpetual, are also providing services on L2.

In addition, some native L2 projects have also begun to show potential. For example, on the Arbitrum network, the game ecology project magic network ) TreasureDAO ( attempts to build a Nintendo on web3, providing various underlying services for different games, initially showcasing the prototype of the ecosystem. Currently, several games are receiving community attention ) such as thebeacon, which has exceeded 20,000 independent addresses within less than two weeks of launching its initial prototype (. In the DeFi field, as of the time of writing, GMX's total transaction volume on Arbitrum has exceeded 70.9 billion USD, and the protocol's accumulated total fees have surpassed 93 million USD.

According to statistics from Orbiter, as of the time of writing, there are 58 projects on Arbitrum with more than 1000 user addresses, 39 projects with more than 10000, 40 projects with more than 1000 monthly active addresses, and 24 projects with more than 10000 monthly active addresses. On Optimism, there are 50 projects with more than 1000 user addresses, 32 projects with more than 10000; 33 projects with more than 1000 monthly active addresses, and 20 projects with more than 10000.

Currently, the protocols with a high number of monthly active addresses and interactions on Arbitrum include Uniswap, Sushiswap, GMX, Hop, TreasureDAO, Galxe, StarGate, dopex, etc.; currently, the ones with a high number of monthly active addresses and interactions on Optimism include Uniswap, Perpetual, synthetix, Velodrome, Rubicon, Pooltogether, Thales, etc.

From the current development status of L2 ecological projects, L2 has already surpassed most public chains.

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3. Active Address Count

From the perspective of daily active users, the daily active addresses of BSC, Ethereum, and Solana are higher than those of Arbitrum and Optimism, while Avalanche is currently at the same level as Arbitrum and Optimism.

From a trend perspective, the daily active users of Ethereum have been relatively stable, with a slight upward trend in the past six months; BSC is basically in a relatively stable state; Solana was relatively stable in the early days, but has shown a downward trend in the past month; Avalanche has seen a certain downward trend in daily active users over the past six months; in comparison, Optimism's daily active users are on a noticeable upward trend, rising from less than 10,000 six months ago to a stable range of 30,000 to 40,000 now; Arbitrum's daily active users also show a significant upward trend, increasing from around 15,000 six months ago to about 40,000 to 50,000.

As time evolves, especially with the subsequent release of EIP-4844, the daily active addresses of L2 have the opportunity to continue increasing. In the next 2-5 years, the ranking of L2 among daily active addresses will also undergo significant changes.

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4. Transaction Quantity

Currently, the daily transaction volume of Ethereum is around 1 million, Arbitrum is about 360,000, and Optimism is around 350,000. Looking back over the past year, the transaction volume of L2 has been on an upward trend, while the Ethereum mainnet has remained relatively stable. It should soon be achievable for the long-term transaction volume of L2 to consistently exceed that of Ethereum L1. The internal consensus messages of Solana will also be counted as transactions, with its transaction volume far exceeding that of other chains.

It should be noted that the trading volume as an indicator cannot fully reflect the activity level of the chain. If the fees are low, it may lead to a higher number of low-quality transactions. Therefore, when assessing the quality of trading volume, it is essential to look at which active dApps are present in its ecosystem, as well as the number of real active users and interactions on these dApps.

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5. Fees

Looking at L2 fees, the cost of sending Ether and exchanging tokens has become relatively cheap, currently ranging from a few cents to a few dimes. According to data at the time of writing, sending Ether on Arbitrum costs about a few cents, while exchanging tokens ranges from a few cents to a few dimes. The fees have significantly decreased compared to before, and currently, the cost of sending Ether is over 10 times lower than L1.

Currently, when comparing the transaction fees of L2 with other public chains, Solana's fee advantage is the most significant. According to the data at the time of writing, the total fee over 24 hours is only 99.17 SOL, with an average transaction fee of only 0.0000057 SOL.

Overall, from the perspective of transaction fees, except for Solana, the advantages of other public chains compared to L2 are not obvious. According to the comparison of fees between L1 and L2, currently Arbitrum and Optimism are at the same level as Avalanche, and exceed many other public chains.

More importantly, the fees for Optimistic Rollups and Zk Rollups have the potential to decrease by several dozens of times. This is mainly related to the subsequent implementation of Proto-danksharding)EIP-4844( and danksharding.

Proto-danksharding)EIP-4844( introduces dedicated space for rollups data. It brings new transaction data types and a fee transaction market specifically for rollups data. It does not use calldata, introduces transactions carrying blobs, and is independent of EVM execution, storing data for a period of time ) such as two weeks ( for pruning to reduce node overhead.

Blob can carry a large amount of data, and blob transactions do not compete with current ordinary transactions for gas usage, avoiding competition for current block space. Compared to calldata, the gas cost is cheaper. EIP-4844 and danksharding will turn Ethereum into a unified settlement layer and data availability layer. From Ethereum's current roadmap, it has started to build a scalable path centered around Rollups.

After the implementation of EIP-4844, the transaction fees for rollups will be greatly reduced. Theoretically, there is potential for a hundredfold reduction in fees; even if there is only a reduction of dozens of times or more than ten times, it means that the fees for L2 will be significantly lower based on the current levels. This also implies that the cost advantages of the vast majority of individual public chains will disappear. Meanwhile, Rollups have advantages in consensus, security bridges, and other aspects, which will have a substantial impact on the competition between subsequent L2s and other public chains.

After EIP-4844 is implemented, the Optimistic Rollup solution will have advantages in the early stages, as its fees may be lower than those of ZK Rollup. Additionally, for ZK Rollup in the early stages, they will need to redesign their rollups to publish proofs with new transaction types. Of course, as the cost of validity proofs decreases, ), current technological innovations are ongoing, and there is still hundreds of times optimization space, (. With the gradual implementation of ZK Rollup technology, this situation may gradually change, and when everything matures, the fees for ZK Rollup are expected to be lower than those for Optimistic Rollup. Furthermore, data compression technology will also be gradually implemented on rollups, and once it is realized, theoretically, there is still a hundred times improvement space for rollups based on the current foundation.

If the aforementioned technologies can be implemented, the daily transaction volume of L2 has the potential to accommodate a scale of over ten million. This already provides sufficient room for development for DeFi and early-stage games.

In summary, in terms of fees, once the subsequent proto-danksharding and danksharding are implemented, the fees of Rollups may be lower compared to most other standalone blockchains. This means that cost-sensitive groups will migrate to Rollups in large numbers based on their security advantages. Previously, the rise of BSC, Solana, and Avalanche was due to the high fees on Ethereum L1. If the fees on L2 can be significantly reduced in the future, users and developers will also have the willingness and motivation to enter the Ethereum network ecosystem.

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6. TPS

Most of the TPS claimed by projects in the market are likely exaggerated, and an external third-party measurement is needed here. The TPS for token transfers and token exchanges are strictly different TPS. The TPS in a testnet or developer network environment is also different from the TPS in a real operating environment.

TPS and decentralization are also related. The higher the degree of decentralization, the more secure it is, but TPS often suffers as a result. Therefore, simply having high TPS is not entirely a good thing; Web2 has the highest TPS.

Dragonfly Capital once conducted benchmarking comparisons of TPS based on token swaps on Uniswap V2 )swap eth for tokens(, and then calculated the approximate TPS through block gas limits and block time. Friends can also conduct tests themselves to draw their own conclusions.

According to the tests conducted by Dragonfly under the aforementioned conditions ) for token swaps on Uniswap V2, the TPS of Ethereum is approximately a little over 9.19; Polygon is about 47.67, Avalanche is around 31.65, BSC is approximately 194.6; Solana is about 273.34( CU has a limit on computational units, similar to gas, with each block being able to contain about 48 million CUs ). The Solana block explorer shows a TPS of around 3000, considering internal consensus messages as transactions, where about 80% of the throughput consists of consensus messages, leaving around 600 TPS.

From this benchmark calculation, Solana's tps should be the peak among all single chains currently, while most other chains have tps ranging from dozens to hundreds, which is about several times to dozens of times compared to Ethereum L1, but it does not reach the space of hundreds of times.

The tps of Ethereum L2, according to Vitalik's calculations, theoretically rollups can reach 1000-4000 tps. If Pro-danksharding and danksharding can be implemented, the tps of Ethereum L2 is expected to exceed 100,000 tps.

In the early practical operation, it may not necessarily achieve the theoretically expected tps, but there is a chance to reach a level comparable to other high-performance single-chain public blockchains. With the subsequent Pro-danksharding( estimated to take at least over 1 year) and the implementation of danksharding( estimated to take at least 2-3 years), the tps of L2 will significantly improve. Coupled with the security and network effects of Ethereum itself, L2 may potentially end the public chain competition at some point in the future. Of course, there is still a long time ahead, and everything is dynamically evolving, which may also introduce other variables. Continuous attention can be maintained.

In addition, L2 does not need to rely on massive subsidy incentives like new public chains such as Aptos and Sui to support its security. It only needs to attract more developers to build products on it with subsidies, thereby promoting ecological development.

The battle between Ethereum L2 and public chain patterns is expected to end within 5 to 10 years.

Currently, various projects are entering the Arbitrum and Optimism ecosystems, and some projects have already seen higher trading activity on L2 than on L1. For example, Synthetix's trading activity on Optimism has surpassed its activity on Ethereum L1. In the future, its