Analysis of the Evolution of Ethereum L2 and Public Chain Ecosystem

Recent data trends and the development of Ethereum's technical roadmap have provided us with some interesting insights.

Development of DeFi Ecosystem

The total locked value of Arbitrum and Optimism is ( TVL, ranking in the top ten. Arbitrum is in fifth place, only behind Ethereum, BSC, Tron, and Polygon, surpassing public chains like Avalanche and Solana. Optimism ranks eighth, also surpassing most public chains.

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

![How is the world of Web3 divided? An interpretation of the evolution of Ethereum Layer 2 and the landscape of public chains])https://img-cdn.gateio.im/webp-social/moments-1e9c4070aeaa84040a6000ff75696d3d.webp(

Ecosystem Project Development

L2)Arbitrum and Optimism( have basically complete DeFi, NFT, and GameFi projects, and some major DeFi protocols on L1 such as Aave, Uniswap, Synthetix, Perpetual, etc. are providing services on L2.

At the same time, some native L2 projects are also starting to show potential. For example, on the Arbitrum network, the gaming ecosystem project magic network ) TreasureDAO ( is trying to build a web3 version of Nintendo, providing underlying services for different games, and initially showing the prototype of the ecosystem. In terms of DeFi, as of the time of writing, GMX's total trading volume on Arbitrum has exceeded $70.9 billion, with the protocol's total fees exceeding $9.3 million.

According to statistics, there are 58 projects on Arbitrum with over 1000 user addresses, 39 projects with over 10000, 40 projects with over 1000 monthly active addresses, and 24 projects with over 10000 monthly active addresses. On Optimism, there are 50 projects with over 1000 user addresses, 32 projects with over 10000; 33 projects with over 1000 monthly active addresses, and 20 projects with over 10000 monthly active addresses.

Currently, the protocols with higher monthly activity on Arbitrum include Uniswap, Sushiswap, GMX, Hop, TreasureDAO, Galxe, StarGate, dopex, etc.; the ones with higher activity on Optimism include Uniswap, Perpetual, synthetix, Velodrome, Rubicon, Pooltogether, Thales, etc.

The L2 ecological project has taken shape. Due to better portability, with costs decreasing and throughput increasing, the pace of ecological development is expected to accelerate. Currently, the L2 ecosystem has surpassed most public chains.

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Active Addresses

From the daily active user data, the number of daily active addresses on BSC, Ethereum, and Solana is higher than that of Arbitrum and Optimism, while Avalanche is on the same order of magnitude as Arbitrum and Optimism.

From a trend perspective, the daily active users of Ethereum are relatively stable, with a slight increase in the past six months; BSC is basically stable; Solana was stable in the early stage but has shown a declining trend in the past month; Avalanche has decreased over the past six months; in contrast, 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; Arbitrum has also shown a clear upward trend, increasing from about 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 further increase. In the next 2-5 years, there may be significant changes in the ranking of daily active addresses for L2.

![How is the world of Web3 divided? An article interpreting the evolution of the Ethereum Layer 2 and public chain landscape])https://img-cdn.gateio.im/webp-social/moments-406520597d83853f80174a6adb34e6b1.webp(

Transaction Amount

Currently, the daily transaction count on Ethereum is around 1 million, Arbitrum approximately 360,000, and Optimism about 350,000. Over the past year, L2 transaction volume has shown an upward trend, while the Ethereum mainnet has remained relatively stable. It is expected that the long-term stable transaction volume of L2 will soon surpass that of Ethereum L1. Solana is also considered to have a higher transaction count than other chains due to internal consensus messages being counted as transactions.

It is important to note that the number of transactions does not fully reflect the activity level of the chain. If the fees are low, it may result in a larger number of low-quality transactions. To assess transaction quality, it mainly depends on the situation of active dApps in the ecosystem, as well as the number of real active users and interactions on these dApps.

![How is the world of Web3 divided? An article interpreting the evolution of Ethereum Layer 2 and public chain patterns])https://img-cdn.gateio.im/webp-social/moments-1d2b5cb2bdd2522bb1257b2067f9ecd5.webp(

Fees

L2 fees have been significantly reduced, with the cost of sending Ether and exchanging tokens currently ranging from a few cents to a few dimes. The fee for sending Ether is over 10 times lower than L1. Apart from Solana, other public chains do not have a significant cost advantage compared to L2. The fees for Arbitrum and Optimism are at the same level as Avalanche and lower than most other public chains.

More importantly, the fees for Optimistic Rollup and ZK Rollup still have the potential to decrease by several dozen times. This is mainly related to the subsequent implementation of Proto-danksharding) EIP-4844 and danksharding. EIP-4844 introduces dedicated space for rollup data, which will greatly reduce rollup transaction fees. Theoretically, there is a potential for a hundred-fold reduction in fees, and even if there is only a decrease by dozens or a few times, it means that L2 fees will still be significantly lowered. This could lead to the disappearance of the fee advantages of the vast majority of standalone public chains.

After the implementation of EIP-4844, the Optimistic Rollups solution may have advantages in the early stage, with costs potentially lower than ZK Rollup. As the cost of validity proof decreases and ZK Rollup technology matures gradually, this situation may change. In addition, data compression technology will also be gradually implemented on rollups, and once implemented, there is theoretically a hundredfold increase in rollup space.

If these technologies can be implemented, the daily transaction volume of L2 has the potential to reach tens of millions. This provides sufficient room for development for DeFi and early gaming applications.

TPS

TPS data needs to be measured by a third party to avoid exaggeration. The TPS for token transfers and swaps also differs, and the TPS in test nets and real operating environments varies as well. Moreover, TPS is related to the degree of decentralization; the higher the degree of decentralization, the more TPS is often sacrificed.

According to third-party tests in the Uniswap V2 token exchange scenario, the TPS for Ethereum is about 9.19, Polygon about 47.67, Avalanche about 31.65, BSC about 194.6, and Solana about 273.34. The Solana block explorer shows a TPS of about 3000, but about 80% of that is internal consensus messages, making the actual usable TPS around 600.

The TPS of Ethereum L2, according to theoretical calculations, can reach 1000-4000 TPS with rollups. If Proto-danksharding and danksharding are implemented, L2 TPS is expected to exceed 100,000. Although early actual operations may not reach theoretical values, there is a chance to be comparable to other high-performance monolithic blockchains. With the subsequent implementation of technology, L2 TPS will significantly increase, coupled with Ethereum's own security and network effects, L2 may end the public chain competition at some point in the future.

Evolution Trend of Patterns

Various projects are entering the Arbitrum and Optimism ecosystems, with some projects' activity on L2 already surpassing that on L1. In the future, other DeFi or crypto games may also exhibit similar phenomena.

As the L2 ecosystem matures, the TVL, active users, and real transaction volume of Arbitrum and Optimism are expected to gradually surpass most public chains. Although it is still uncertain whether they can surpass a few mainstream non-Ethereum public chain networks, there is a significant possibility of achieving this at the overall ecological level based on the evolutionary trends.

The future landscape may be a coexistence of multiple chains, with Ethereum and its L2 likely becoming the primary network, alongside a few larger chains and ecosystems, as well as some niche chains focused on specific areas. If L2 ultimately stands out, it will further enhance the network effect of the Ethereum ecosystem, solidifying its leading position in the fields of smart contracts and web3.

However, there are still potential variables. If a new technological paradigm suddenly emerges that completely disrupts the current scalability of blockchain from different paths, it could change the entire landscape. Although the probability is low, it is worth paying attention to. Currently, various public chain networks are not yet in their final form, and the true endgame of blockchain will have to wait until web3 is truly widely adopted.

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