Ethereum

Arbitrum

Base

Optimism

Polygon

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<p>Ethereum Layer-2 solutions bundle several transactions and process them as a single transaction. This is possible through a computation called the Merkle tree. Since a bunch of transactions are finalized as one, the cost of processing is reduced severalfold.</p> 
<p>Despite the low cost of each transaction, often a few cents, these layer-2 solutions process a lot of transactions and are able to sustain themselves.&nbsp;</p> 
<h2 class="wp-block-heading" id="strong-the-power-of-scaling-strong"><strong>The Power of Scaling</strong></h2> 
<p>The unique aspect of layer-2 solutions is their ability to process a large number of transactions in a very short period of time. They achieve this by having a lesser degree of decentralization.</p> 
<p>For example, Ethereum has 1 million validators but is able to process around 10-15 transactions per second (natively) because each transaction has to go through multiple validators, at least 30.&nbsp;</p> 
<p>On the other hand, blockchains like Polygon have far lesser validators at 105. This helps Polygon finalize transactions in a relatively short time. This helps Polygon handle 65,000 transactions per second.</p> 
<p>Due to this high capacity, it costs less to transact on Layer-2 chains like Polygon.</p> 
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"> 
 <p><a href="https://droomdroom.com/how-can-layer-2s-afford-ultra-low-gas-fees/" target="_blank" rel="noreferrer noopener"><strong>Here is a deeper dive into the actual technology that goes into making Layer 2s cheaper</strong>.</a></p> 
</blockquote> 
<h2 class="wp-block-heading" id="strong-quantity-compensates-for-quality-strong"><strong>Quantity Compensates for Quality</strong></h2> 
<p>In a straightforward manner, it is easy to understand that the low fees would indeed lead to a short revenue and hence have to be compensated with a high volume of transactions.</p> 
<p>Layer-2 chains rely on the high number of transactions that are often generated from Dapps, DeFi protocols, and low-valued but frequent transactions.</p> 
<p>At a point where Ethereum charges around $1 for each transaction and processes an average of around <a href="https://etherscan.io/txs" target="_blank" rel="noreferrer noopener nofollow">a million</a> transactions per day, these Layer 2s barely charge a few cents. However, with a fairly large no. of transactions every day, they manage to survive despite charging pennies on the dollar.</p> 
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 <img decoding="async" width="1024" height="206" src="https://droomdroom.com/wp-content/uploads/2024/09/etherscan-1024x206.png" alt="etherscan" class="wp-image-28406" title="How Layer 2 Bridges and Scaling Solutions Earn Revenue Despite Low Fees? 5">
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  Ethereum Vital Stats from Etherscan
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</figure> 
<h2 class="wp-block-heading" id="strong-top-layer-2-solutions-strong"><strong>Top Layer-2 Solutions&nbsp;</strong></h2> 
<h3 class="wp-block-heading" id="strong-polygon-strong"><strong>Polygon</strong></h3>  
<p>Polygon is one of the most popular layer-2 chains and has a rapidly growing ecosystem. The project consists of the Polygon blockchain (Layer 2) with the POL token, a zero-knowledge EVM, and a few sidechains.</p> 
<p>According to its blockchain explorer, Polygon processes around 3 million transactions per day, which yields the project a revenue of around 30,000 POL every day.&nbsp;</p> 
<h3 class="wp-block-heading" id="strong-arbitrum-strong"><strong>Arbitrum</strong></h3>  
<p>Arbitrum One, or simply the Arbitrum, is one of the top Layer 2 blockchains, processing an average of <a href="https://arbiscan.io/" target="_blank" rel="noreferrer noopener nofollow">1.5 million</a> transactions per day. The blockchain’s official explorer does not list its gas revenue, but as per the transaction data, it can be estimated at around 10,000-15,000 ARB.</p> 
<p>The native token of this blockchain is ARB.</p> 
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"> 
 <p><a href="https://droomdroom.com/ethereum-layer-2-solution-arbitrum-scalability/" target="_blank" rel="noreferrer noopener"><strong>A closer look shows that it takes a lot more effort to develop a Layer 2 chain like Arbitrum.</strong></a></p> 
</blockquote> 
<h3 class="wp-block-heading" id="strong-optimism-strong"><strong>Optimism</strong></h3>  
<p>Optimism uses a unique approach to create blocks. It uses the Optimistic Rollup, which stores all the rolled-up transactions inside the Ethereum blockchain and can be accessed at any time in the future.</p> 
<p>The blockchain processes around 0.75 million daily transactions and gets a fee revenue of around $5000 USD (estimated) per day.</p> 
<p>Though highly scalable, the blockchain usually has around 25 transactions per second of network activity.</p> 
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"> 
 <p><a href="https://droomdroom.com/optimistic-rollups-vs-zk-rollups/" target="_blank" rel="noreferrer noopener"><strong>Do you know the two main types of rollups that help these Layer 2 chains charge lower fees?</strong></a></p> 
</blockquote> 
<h3 class="wp-block-heading" id="strong-base-strong"><strong>Base</strong></h3>  
<p>Base is a blockchain developed by Coinbase, one of the largest crypto exchanges in the world. It processes around 5 million daily transactions, yielding about $200 million in annual revenue.</p> 
<p>Being a blockchain with a large corporate backing, Base enjoys high promotional activity despite being a very new blockchain (launched on Aug 9, 2023).&nbsp;</p> 
<p>Coinbase has also been developing its own Bitcoin-pegged token called cbBTC for the base blockchain.</p> 
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   <p lang="en" dir="ltr">This week in <a href="https://twitter.com/hashtag/crypto?src=hash&amp;ref_src=twsrc%5Etfw" rel="nofollow noopener" target="_blank">#crypto</a> markets:<br><br>– <a href="https://twitter.com/coinbase?ref_src=twsrc%5Etfw" rel="nofollow noopener" target="_blank">@coinbase</a> is developing its own Bitcoin-pegged token, “cbBTC,” for its layer-2 blockchain, <a href="https://twitter.com/base?ref_src=twsrc%5Etfw" rel="nofollow noopener" target="_blank">@base</a>, amidst changes in the wBTC ecosystem involving a joint venture between <a href="https://twitter.com/BitGo?ref_src=twsrc%5Etfw" rel="nofollow noopener" target="_blank">@BitGo</a> and BitGlobal.<br><br>– The involvement of Tron Network founder Justin Sun… <a href="https://t.co/o4YW5dspGP" rel="nofollow" target="_blank">pic.twitter.com/o4YW5dspGP</a></p>— CoinMetrics.io (@coinmetrics) <a href="https://twitter.com/coinmetrics/status/1824425073958162924?ref_src=twsrc%5Etfw" rel="nofollow noopener" target="_blank">August 16, 2024</a>
  </blockquote>
  <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> 
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<h3 class="wp-block-heading" id="strong-blast-strong"><strong>Blast&nbsp;&nbsp;</strong></h3>  
<p>Blast is yet another Layer 2 chain with an average of 350k daily transactions. The blockchain usually processes 5-10 transactions per second, making it one of the lesser-used L2 chains.</p> 
<h2 class="wp-block-heading" id="strong-conclusion-strong"><strong>Conclusion</strong></h2> 
<p>Though the Layer 2 blockchains charge a lot less fee as compared to Ethereum, their high transaction volume yields them a fairly decent revenue. This helps them most of them run profitably despite charging a few cents for each transaction.</p> 
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"> 
 <p><a href="https://droomdroom.com/why-only-native-tokens-are-used-for-gas-fee/" target="_blank" rel="noreferrer noopener"><strong>Despite being based on Ethereum, you cannot pay ETH for gas fees on these chains.</strong></a></p> 
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How Layer 2 Bridges and Scaling Solutions Earn Revenue Despite Low Fees?

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