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Recent data shows Ethereum’s scaling solutions have locked assets amounting to $3 billion. The data tracks the total value of locked holdings in 17 different Ethereum L2 solutions. Arbitrum leads the list with $2.2 billion assets and a market share of 75%.
A Growing Interest in Layer 2 Projects
Within the last seven days, Arbitrum made profits of more than 3000%. The project applies an Optimistic Rollup Technology in its operations. Thus, it allows the communication of smart contracts between Ethereum and Arbitrum’s solution.
Consequently, Arbitrum can execute most of the transactions taking place on Ethereum’s leading network. In all the solutions, Arbitrum operates as the only Ethereum Virtual Machine available to the public. Moreover, making the solution widely available boosts projects like the Nyan token, which has assets worth $1.4 billion.
Coming in second on the list is dYdX, with a total of $330 million assets. The project has a market share of 10.89% and a 15.51% increase in investments over the last seven days. In April 2021, dYdX began using an Ethereum scaling solution known as StarkWare. The migration offers users a new product with immediate trading and a modern UI. As such, users can perform transactions at lower trading fees.
Optimism is the third L2 network with locked assets worth $155.7 million. The solution works with an Optimistic Rollup technology to improve Ethereum’s transaction system.
Other Projects on the Data
Another project ranking on the list is Loopring, with locked assets worth more than $130 million. Loopring’s scaling solution enables instant completion of transactions. The network leverages the Zero-Knowledge Proofs technology that combines many transactions at once.
ZKSwap V2 ranks as the fifth project containing locked assets of $77.3 million. As a decentralized exchange, ZKSwap V2 facilitates the real-time settlement of transactions for users. It also allows users to conduct 50 transactions daily at zero trading fees. Other projects ranking with higher TVL assets include DeversiFi, zkSync, Sorare, and many more.
The Need for L2 Solutions
Today, Ethereum’s network hosts millions of users and projects. Despite being the second-largest digital asset, Ethereum faces a major scalability challenge. A network overload causes slower processes which usually attract hefty service fees. Layer 2 solutions come in as an alternative to the platform’s scaling issue.
The L2 ecosystems introduce projects which improve the performance of Ethereum by working as sidechains. Therefore, users can expect lower transaction fees and faster settlement of trades. The solutions offer these benefits without compromising Ethereum’s security.