Ethereum

Blast

Stacy

when

Common Wealth

<h4><strong>The red market is when market prices are down; it is like a test for the strength of blockchain networks and protocols.&nbsp;</strong></h4>
<p>Ethereum L2 solutions are helpful and valuable to users. This article presents the current state of Ethereum Layer 2 solutions.</p>
<h5><strong>What Are Ethereum L2s?</strong></h5>
<p><a href="https://www.altcoinbuzz.io/?s=ethereum" target="_blank" rel="noopener noreferrer nofollow">Ethereum</a> is a vast blockchain that can sometimes get congested and expensive. So, Ethereum L2s emerged to fix this issue. These L2s are parallel blockchains that make transactions faster and cheaper, increasing efficiency. Picture Ethereum as a motorway with heavy traffic. L2s are minor roads connected to the highway that allow cars (transactions) to flow more without congestion.</p>
<p>The number of Layer 2 solutions built on Ethereum grew in 2023. Data from <a href="https://x.com/l2beat" target="_blank" rel="noopener noreferrer nofollow">L2Beat</a> showed 74 L2s and 30 L3s. L3s are smaller chains constructed on existing L2s.<br> Amidst these records about <a href="https://www.ledger.com/academy/topics/blockchain/what-are-ethereum-layer-2-blockchains-and-how-do-they-work" target="_blank" rel="noopener noreferrer nofollow">Ethereum L2</a> growth, only a few are popular and valuable to users. Only a few have attracted real users and money to their protocols.</p>
<blockquote class="twitter-tweet">
 <p dir="ltr" lang="en">Market Cap: Circulating and Fully Diluted</p>
 <p>Most L2s currently have a multi-billion-dollar FDV but a circulating market cap below $1B, indicating that a large portion of their tokens are still not in circulation.</p>
 <p>The exception is <a href="https://twitter.com/0xMantle?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@0xMantle</a>, with 52% of its supply unlocked, making… <a href="https://t.co/sg5mqolrl2" rel="noopener noreferrer nofollow">pic.twitter.com/sg5mqolrl2</a></p>
 <p>— Stacy Muur (@stacy_muur) <a href="https://twitter.com/stacy_muur/status/1834171827373179065?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">September 12, 2024</a></p>
</blockquote>
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p>
<p>This article focuses on the nine most popular L2s based on user activity and total value locked (TVL). The active user base and TVL represent the money stored in these chains. More engagement means more money and high TVL means high prospects and potential.</p>
<h5><strong>Understanding Market Cap and Token Supply</strong></h5>
<p>Many L2s have high “<a href="https://www.coingecko.com/learn/what-is-fully-diluted-valuation-fdv-in-crypto" target="_blank" rel="noopener noreferrer nofollow">fully diluted valuations</a>” (FDV), representing their total value if all tokens were circulating. Yet most tokens remain locked, with circulating market caps often below $1 billion. From statistics, <a href="https://coinmarketcap.com/currencies/mantle/" target="_blank" rel="noopener noreferrer nofollow">Mantle</a> is the only L2 with above 52% of token circulation and a market cap of more than $1 billion.</p>
<p>This difference between FDV and circulating supply has resulted in a letdown with recent airdrops. This is because locked tokens reduce the perceived value of rewards. Here is an example of the TVL of L2 chains:</p>
<blockquote class="twitter-tweet">
 <p dir="ltr" lang="en">On February 15th, 2024, the TVL of all L2 projects listed on L2BEAT combined surpassed $25 billion for the first time! <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f497.png" alt="💗" class="wp-smiley" style="height: 1em; max-height: 1em;"></p>
 <p>With almost 40 active projects and the same number upcoming, a growing scaling factor, and many projects beginning their move to ascend in our Stages… <a href="https://t.co/Sxz8OFTAMz" rel="noopener noreferrer nofollow">pic.twitter.com/Sxz8OFTAMz</a></p>
 <p>— L2BEAT <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f497.png" alt="💗" class="wp-smiley" style="height: 1em; max-height: 1em;"> (@l2beat) <a href="https://twitter.com/l2beat/status/1758113388184416541?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">February 15, 2024</a></p>
</blockquote>
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p>
<h5><strong>What is Total Value Locked (TVL)?</strong></h5>
<p><a href="https://coinmarketcap.com/academy/glossary/total-value-locked-tvl" target="_blank" rel="noopener noreferrer nofollow">TVL</a> is vital for evaluating L2s and measuring the funds stored in the chain through contracts, staking, or liquidity pools. While most L2s saw a summer TVL drop, some, like Scroll, Linea, and Mantle, maintained theirs with reward programs.</p>
<p>However, not all incentives excite users the same way. Linea’s long-running airdrop has lost appeal, while newer programs, like Scroll’s, have kept users more engaged.</p>
<blockquote class="twitter-tweet">
 <p dir="ltr" lang="en">Total Value Locked</p>
 <p>On the TVL side, all chains have experienced a tough summer, except for those with ongoing incentive programs like <a href="https://twitter.com/Scroll_ZKP?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@Scroll_ZKP</a>, <a href="https://twitter.com/LineaBuild?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@LineaBuild</a>, and <a href="https://twitter.com/0xMantle?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@0xMantle</a>.</p>
 <p>However, Linea’s airdrop program, which has lasted for almost a year, has seen decreased interest from… <a href="https://t.co/DIkgPsyYaI" rel="noopener noreferrer nofollow">pic.twitter.com/DIkgPsyYaI</a></p>
 <p>— Stacy Muur (@stacy_muur) <a href="https://twitter.com/stacy_muur/status/1834171882507305184?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">September 12, 2024</a></p>
</blockquote>
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p>
<h5><strong>Fees and Transaction Activity</strong></h5>
<p><a href="https://www.altcoinbuzz.io/?s=gas+fees" target="_blank" rel="noopener noreferrer nofollow">Gas fees</a> is a payment anyone needs to cover to make a successful blockchain-related transaction. So, Ethereum L2s help reduce the cost of successful transactions. In its recent <a href="https://www.altcoinbuzz.io/cryptocurrency-news/everything-about-ethereums-dencun-upgrade/" target="_blank" rel="noopener noreferrer nofollow">Dencun upgrade</a>, Ethereum reduced fees on both Ethereum and L2s.</p>
<p>For example, <a href="https://www.base.org/" target="_blank" rel="noopener noreferrer nofollow">Base</a> experienced solid transaction growth fueled by memecoins. ZKSync and Linea, despite incentives, cannot increase their growth rate as Base does.</p>
<blockquote class="twitter-tweet">
 <p dir="ltr" lang="en">Fees and Transaction Activity</p>
 <p>Post-Dencun, DA no longer significantly drives ETH’s economics, impacting fees on both Ethereum and L2s. Therefore, it’s crucial to examine fee dynamics alongside transaction activity. <a href="https://t.co/jxlmJvZnkw" rel="noopener noreferrer nofollow">pic.twitter.com/jxlmJvZnkw</a></p>
 <p>— Stacy Muur (@stacy_muur) <a href="https://twitter.com/stacy_muur/status/1834171942188056704?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">September 12, 2024</a></p>
</blockquote>
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p>
<h5><strong>Monthly Active Users (MAU)</strong></h5>
<p>The number of MAUs helps check Ethereum L2 solutions. It shows how many people use a specific chain. Among Ethereum L2s, Mantle and Base have the largest MAU, meaning they have the potential to keep users and attract more capital.</p>
<p><a href="https://www.starknet.io/" target="_blank" rel="noopener noreferrer nofollow">Starknet</a>, <a href="https://zksync.io/" target="_blank" rel="noopener noreferrer nofollow">ZKSync</a>, and <a href="https://x.com/blast?s=21" target="_blank" rel="noopener noreferrer nofollow">Blast</a> are behind. Based on the comparison of MAU and FDV, Starknet is overhyped compared to <a href="https://x.com/arbitrum?s=21" target="_blank" rel="noopener noreferrer nofollow">Arbitrum</a>, <a href="https://optimism.io/" target="_blank" rel="noopener noreferrer nofollow">Optimism</a>, and <a href="https://zksync.io/" target="_blank" rel="noopener noreferrer nofollow">ZKSync</a>.</p>
<blockquote class="twitter-tweet">
 <p dir="ltr" lang="en">Monthly Active Users</p>
 <p>The MAU dynamics, a key indicator for assessing chain retention rates, reveal a similar trend. <a href="https://twitter.com/0xMantle?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@0xMantle</a> and <a href="https://twitter.com/base?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@base</a> are performing the best, while <a href="https://twitter.com/StarknetFndn?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@StarknetFndn</a>, <a href="https://twitter.com/zksync?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@zksync</a>, and <a href="https://twitter.com/blast?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@blast</a> lag behind.</p>
 <p>Comparing MAU data to FDV, it’s evident that Starknet is… <a href="https://t.co/ot6mU4hlIn" rel="noopener noreferrer nofollow">pic.twitter.com/ot6mU4hlIn</a></p>
 <p>— Stacy Muur (@stacy_muur) <a href="https://twitter.com/stacy_muur/status/1834171997364085149?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">September 12, 2024</a></p>
</blockquote>
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p>
<h5><strong>Bridge Inflow and Outflow: Where is the money going?</strong></h5>
<p><a href="https://www.altcoinbuzz.io/?s=Bridges" target="_blank" rel="noopener noreferrer nofollow">Bridges</a> are channels through which money can move from one blockchain to another. You can move money via a bridge from Ethereum to L2s (inflow) and from L2s back to Ethereum (outflow).</p>
<p>If an L2 has more inflow than outflow, it’s a good sign that new users and capital are coming in. Among the L2s, Arbitrum, Starknet, Optimism, Base, and Mantle are doing well. However, Linea, ZKSync, and Blast show negative net flows.</p>
<blockquote class="twitter-tweet">
 <p dir="ltr" lang="en">Ever wondered what the top 10 L2 projects would look like without taking their associated tokens into account?</p>
 <p>Wonder no more! <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1fae1.png" alt="🫡" class="wp-smiley" style="height: 1em; max-height: 1em;"> <a href="https://t.co/uotW2mycql" rel="noopener noreferrer nofollow">pic.twitter.com/uotW2mycql</a></p>
 <p>— L2BEAT <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f497.png" alt="💗" class="wp-smiley" style="height: 1em; max-height: 1em;"> (@l2beat) <a href="https://twitter.com/l2beat/status/1797945549930315924?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">June 4, 2024</a></p>
</blockquote>
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p>
<h5><strong>Developer Activity</strong></h5>
<p>Developer activity is one feature used to determine the strength of a blockchain. Blast has over 300 core developers, exceeding other L2s with only 30–50 developers.</p>
<p>While there is no special release on what Blast is currently working on, having 300 core developers and significant code commits signifies its productivity.</p>
<blockquote class="twitter-tweet">
 <p dir="ltr" lang="en">Developer Activity</p>
 <p>Lastly, developer activity is measured by the number of core developments and code commits. This data helps evaluate the team’s current productivity and detect any ongoing personnel cuts. <a href="https://t.co/K5KMlcoVHZ" rel="noopener noreferrer nofollow">pic.twitter.com/K5KMlcoVHZ</a></p>
 <p>— Stacy Muur (@stacy_muur) <a href="https://twitter.com/stacy_muur/status/1834172072727330881?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">September 12, 2024</a></p>
</blockquote>
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p>
<h5><strong>Conclusion</strong></h5>
<p>The red market has shown us which Ethereum L2s are standing firm and which are struggling. This research is on accurate blockchain data; the numbers don’t lie. You can look into these chains to know where the money is going.</p>
<p><img decoding="async" src="https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner.jpg"></p>
<p><iframe title="The 2 Altcoins To Pay Attention to Right Now!" width="696" height="392" src="https://www.youtube.com/embed/UFTEfOC33f4?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe></p>
<h5><strong>Disclaimer</strong></h5>
<p>The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.</p>
<p>We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence. This article has been sponsored by Common Wealth and Three Protocol.</p>
<p>Copyright Altcoin Buzz Pte Ltd.</p>
<p>The post <a href="https://www.altcoinbuzz.io/bitcoin-and-crypto-guide/red-market-reveals-true-ethereum-l2-users-in-depth-research/" rel="noopener noreferrer nofollow">Red Market Reveals True Ethereum L2 Users: In-Depth Research</a> appeared first on <a href="https://www.altcoinbuzz.io" rel="noopener noreferrer nofollow">Altcoin Buzz</a>.</p>

Red Market Reveals True Ethereum L2 Users: In-Depth Research

Altcoin Buzz

Other articles published on Sep 17, 2024

My Neighbor Alice Announces Beta Season 2 and Token Airdrop

Bhutan Quietly Amasses $780 Million in Bitcoin Holdings

Circle and Sony Block Solutions Labs Partner to Boost USDC Adoption on Soneium

Crypto: Solana On The Brink Of The Abyss, Heading Towards Another Decline?

Is It Too Late To Buy BABYDOGE? Baby Doge Coin Price Soars 12% After Binance Listing, And This Mi...

Bitcoin Hits $461 Billion in Key Indicator, BTC Price Rebound Coming?

Join our free newsletter for daily crypto updates!