The Evolution of Ethereum L2 and Public Chain Landscape

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

1. TVL and Trading Volume of Different Chains in DeFi

Arbitrum and Optimism's TVL rankings have gradually entered 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 exceeding most public chains.

In terms of 24-hour DeFi trading volume, Arbitrum ranks third, while Optimism ranks fifth. Arbitrum is only behind Ethereum and BSC, surpassing most public chains. Optimism, on the other hand, is only behind 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. Ecosystem Project Development

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

Some native L2 projects are also beginning to show potential. For example, the gaming ecosystem project Magic Network on the Arbitrum network, ) TreasureDAO (, attempts to build a Nintendo on web3, providing underlying services for different games, and has initially showcased the prototype of the ecosystem. In terms of DeFi projects, GMX's total trading volume on Arbitrum has exceeded $70 billion, and the protocol's cumulative fees have surpassed $93 million.

According to the data, there are 58 projects on Arbitrum with user addresses exceeding 1,000, 39 projects with over 10,000, 40 projects with monthly active addresses exceeding 1,000, and 24 projects with monthly active addresses over 10,000. On Optimism, there are 50 projects with user addresses exceeding 1,000, 32 projects with over 10,000; 33 projects with monthly active addresses exceeding 1,000, and 20 projects with over 10,000.

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

The L2 ecosystem projects have begun to take shape. Due to better portability, with decreasing costs and increasing throughput, the speed of ecological development is expected to accelerate. Currently, the L2 ecosystem has surpassed most public chains.

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3. Active Addresses

In terms of daily active users, the daily active addresses of BSC, Ethereum, and Solana are higher than those of Arbitrum and Optimism, while Avalanche is on the same order of magnitude as Arbitrum and Optimism.

In terms of trends, the daily active users of Ethereum have remained relatively stable, with a slight increase in the past six months; BSC has been basically stable; Solana was relatively stable in the earlier period but has shown a downward trend recently; Avalanche has experienced a certain downward trend over the past six months; in comparison, the daily active users of Optimism have significantly increased, rising from less than 10,000 six months ago to around 30,000 to 40,000; the daily active users of Arbitrum have also significantly increased, rising from around 15,000 six months ago to around 40,000 to 50,000.

As time goes by, especially after the launch of EIP-4844, the daily active addresses of L2 are expected to continue to increase. In the next 2-5 years, there may be significant changes in the ranking of daily active addresses for L2.

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4. Transaction Amount

Currently, the daily transaction count on Ethereum is about 1 million, Arbitrum around 360,000, and Optimism about 350,000. Over the past year, L2 transaction volumes have been increasing, while the Ethereum mainnet has remained relatively stable. The long-term stability of L2 transaction counts exceeding those of Ethereum L1 may be achieved soon. Solana's internal consensus messages are also considered transactions, and its transaction numbers are much higher than those of other chains.

It is important to note that the number of transactions does not fully reflect the level of activity on the chain; low fees may lead to a larger number of low-quality transactions. To assess transaction quality, one should primarily look at the active dApps in the ecosystem and their real user numbers and interaction volumes. Therefore, from an overall perspective, the number of transactions should be approached with caution.

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5. Fees

L2 fees have been significantly reduced, with low costs for sending Ether and exchanging tokens, ranging from a few cents to a few dimes. Currently, the cost of sending Ether is over 10 times lower than L1.

Compared to other public chains, Solana has the most obvious fee advantage, with a total fee of only 99.17 SOL in 24 hours and an average transaction fee of only 0.0000057 SOL.

Overall, apart from Solana, the cost advantages of other public chains regarding L2 are not significant. The fees for Arbitrum and Optimism are comparable to Avalanche and lower than many other public chains.

Moreover, the fees for Optimistic Rollup and Zk Rollup still have the potential to decrease by several tens of times, mainly related to Proto-danksharding)EIP-4844( and the implementation of danksharding.

EIP-4844 introduces dedicated space for rollup data, bringing a new type of transaction data and a specialized fee market for rollup data. Blobs can carry a large amount of data, avoiding the current competition for block space, resulting in lower gas costs. EIP-4844 and danksharding will make Ethereum a unified settlement layer and data availability layer.

After the implementation of EIP-4844, the transaction fees for rollups will be greatly reduced, theoretically allowing for a reduction of up to a hundred times. Even if there is only a tenfold or several dozen times increase, it still means that L2 fees will be significantly lowered. This will eliminate the fee advantages of most individual public chains. At the same time, rollups have advantages in consensus, security bridges, and other aspects, which will influence the competitive landscape between L2 and other public chains.

The initial Optimistic Rollups solutions may have advantages in terms of costs. As ZK Rollup technology matures gradually, this situation may change progressively. Data compression technology will also be implemented on rollups, and once it is realized, there is theoretically a potential for a hundredfold improvement.

If these technologies are implemented, the daily trading volume of L2 may accommodate a scale in the tens of millions, providing enough space for DeFi and early-stage games.

In summary, once proto-danksharding and danksharding are implemented, Rollup fees may be lower than those of most monolithic public chains. This will encourage cost-sensitive groups to migrate en masse to Rollup based on security advantages. Users and developers will also be motivated to enter the Ethereum network ecosystem.

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6. TPS

TPS data is often exaggerated and requires third-party measurement. The TPS for token sending and exchanging is different, and the TPS for testnets and real operations is also different. TPS is related to the degree of decentralization; the higher the degree of decentralization, the lower the TPS tends to be.

According to tests by Dragonfly Capital under the token exchange conditions of Uniswap V2, Ethereum has a TPS of about 9.19, Polygon about 47.67, Avalanche about 31.65, BSC about 194.6, and Solana about 273.34) subject to CU limit (. The Solana block explorer shows a TPS of around 3000, but 80% are internal consensus messages, and the actual transaction TPS is about 600.

Solana's TPS is the highest among current single-layer chains, while other chains generally have TPS ranging from dozens to hundreds, which is several times to dozens of times higher compared to Ethereum L1.

The TPS of Ethereum L2, calculated by Vitalik, can theoretically reach 1000-4000 TPS for rollups. If Pro-danksharding and danksharding are implemented, L2 TPS is expected to exceed 100,000.

In practice, the theoretical TPS may not be achieved, but it is expected to compare favorably with high-performance monolithic public chains. With Pro-danksharding) estimated to take at least 1 year and danksharding( estimated to take at least 2-3 years for implementation, L2 TPS will be significantly improved. Combined with the security and network effects of Ethereum, L2 may end the public chain competition at some point in the future. However, this will still take a long time, and everything is dynamically evolving, which may bring about other variables worthy of continuous attention.

L2 does not need to provide large security subsidies like new public chains ) such as Aptos, Sui, etc. (; it only needs to attract more developers to build products and promote ecological development.

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

Various projects are entering the Arbitrum and Optimism ecosystems, with some projects experiencing trading activity on L2 that has surpassed L1, such as Synthetix on Optimism, which has exceeded Ethereum L1 in trading volume. In the future, similar situations may arise for other DeFi or crypto games.

As the L2 ecosystem matures, the TVL, active users, and real trading volume of Arbitrum and Optimism will gradually surpass that of most public chains. Whether they can surpass the very few mainstream non-Ethereum public chain networks remains uncertain, but the overall ecological aspect has a higher probability of exceeding them. If new public chains cannot achieve an improvement of more than ten times in terms of cost, speed, and user experience, it will be difficult to surpass L2.

The future will be a multi-chain era, with Ethereum and its L2 likely becoming the primary networks, while there will be a few larger chains and ecosystems, as well as numerous niche chains. Currently, there are over 100 L1 blockchains focused on specific areas such as gaming chains and carbon application chains.

According to the current trend, L2 will become an important competitor to other public chains. If L2 ultimately stands out, it will further enhance the network effects of the Ethereum ecosystem, solidifying its leading position in the blockchain smart contract field ) and even web3(.

In summary, L2 will form direct competition with non-Ethereum public chains. L2 has advantages in security, costs are expected to significantly decrease, throughput is expected to greatly increase, and it can leverage the advantages of the traditional Ethereum network ecosystem, potentially occupying a favorable position in the competition.

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Potential Variables in the Pattern Struggle

Possible unexpected situations include the sudden emergence of new technological paradigms that could completely disrupt the current scalability of blockchain through different paths. While the probability of this is low, it is worth paying attention to.

In this case, the various public chain networks are not in their final form, and the blockchain landscape is far from being defined. The true endgame of blockchain will only become clear when web3 truly explodes. Currently, web3 is still in a niche stage, with a very small real user base; even though Ethereum has over a hundred million addresses, the actual user group is not large.

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