Mid-year review of the Layer2 track: Is the growth data true or false?

Author: Linda Bell

In March 2024, Ethereum completed the Cancun upgrade, bringing attention back to the Layer2 field. At the same time, Starknet and zkSync completed their empty plans in the first half of the year, and all four major Layer2 projects have issued tokens. In addition, some new Layer2 projects will also perform very well in 2024. For example, Base achieved significant traffic growth in the first half of 2024, surpassing Optimism to become the second largest Layer2.

Although the Layer 2 field shows strong growth trends, the market still has doubts about the authenticity of its data. Previously, zkSync’s average daily transaction volume and number of active addresses have been questioned. So does this apparent prosperity truly reflect the actual usage of the web?

TL;DR:

Arbitrum continues to lead the way in the first half of 2024 , the total locked-up value reached US$17.15 billion, accounting for 40% of the market share, ranking first.

• Base surpassed Optimism and became the second largest Layer 2 with a TVL of US$7 billion platform. In addition, as of July 28, Base’s average daily transaction volume reached 4 million, almost twice that of Arbitrum, and the number of active addresses also exceeded Arbitrum’s, reaching more than 600,000.

• zkSync's TVL will reach US$1.12 billion in the first half of 2024, an increase of approximately 99% from the beginning of the year , but the number of active addresses dropped by 83.5% after the airdrop, and the average daily trading volume also dropped by 86%. Similarly, Starknet’s TVL fell back to $685 million after reaching an all-time high of $1.776 billion in March, with the number of active addresses falling by 92% and average daily transaction volume falling by 64.2%.

• Taiko will be launched on the mainnet in May 2024, and its TVL reached An all-time high of $190 million, but later fell back to $163.45 million. The number of active addresses fell by 78.3% after peaking in June.

• Scroll TVL’s annual growth rate reached 1544% last year, but its number of active addresses and average daily transactions The increase in volume is relatively small. The number of active addresses increased by 13.4% from the beginning of the year, and the average daily transaction volume increased by 27.7%.

(The data source of this article is L2BEAT, growthepie and DeFiLlama)

Total Lock Warehouse value

Arbitrum leads the way, Base surpasses Optimism Becoming the second largest Layer2

In the first half of 2024, the total locked value of the Layer2 ecosystem increased from approximately US$22.8 billion at the end of January to US$42.97 billion, an increase of approximately 88%. Among them, Arbitrum, Optimism and Base are the main contributors.

Since the beginning of 2024, Arbitrum has consistently led the way in total locked value. As of July 28, Arbitrum’s TVL reached approximately US$17.15 billion, firmly ranking first, occupying approximately 40% of the market share, far exceeding the second-ranked Base by more than 2.4 times. According to DeFiLlama data, the project with the highest total locked value on Arbitrum is AAVE, with a locked value of US$812.62 million, followed by GMX and Uniswap, with US$513.89 million and US$325.43 million respectively.

In addition, as can be seen from the chart below,Arbitrum’s total locked value showed a downward trend from March to May. The main reason may be that the Arbitrum team and investors unlocked a large number of ARB tokens in March. According to Token Unlocks data, as of July 28, the unlocking progress of ARB is temporarily 34%.

As a rising star,Base has maintained an upward trend since the beginning of 2024 and overtook Optimism in June to become the second largest Layer2. Currently, the total locked value of Base is approximately $7 billion, an increase of approximately 716% from the beginning of the year. As can be seen from the figure below, Base experienced a significant TVL increase in March, possibly due to the continued growth of Farcaster, the reduction of Gas fees after the Cancun upgrade, and the popularity of the MEME token, which led to a significant increase in on-chain liquidity. Promoted the growth of TVL. However, Base’s TVL is currently down slightly, down approximately 6.6% from June.

According to DefiLlama data, the current DeFi TVL on Base is US$1.67 billion, of which native DeFi projects dominate, including Aerodrome (US$654 million) and Extra Finance (US$110 million). Aerodrome is currently the dApp with the highest total locked value on the Base chain, more than double the lead of second-ranked Uniswap.

Optimsim currently ranks third in terms of total locked-up volume. It reached a historical high in the first half of the year on March 10, 2024, and then fell slightly, but overall it was relatively stable, and was eventually overtaken by Base in June. According to DeFiLlama data, the top three TVL projects in the Optimism ecosystem are AAVE v3, Synthetix and Velodrome. But over the past month, the TVL of these projects has shown a downward trend.

Scroll has repeatedly hit new highs, and Taiko TVL has fallen back after reaching historical highs

On the other hand,Scroll’s total locked-in value has hit new highs in 2024, currently reaching US$1.3 billion , ranking fourth among the Layer 2 selected in this article, with an increase of an astonishing 1544%. This growth may be attributed to a series of activities launched by Scroll at both the user and developer levels. Scroll launched Scroll Sessions in April and Session One on June 21 to specifically reward DeFi users for providing liquidity in DEXs. In addition, Scroll also launched the "Level Up with Scroll" platform, allowing developers to apply for ecological funding.

According to DeFiLlama data, the project with the highest total lock-up value on Scroll is its ecologically native project Pencils Protocol, with a lock-up value of US$310.87 million, an increase of 317% in the past month. It is worth noting that the total locked value of Scroll DeFi is US$769.02 million, and the total locked value of the top three projects in its ecosystem accounts for more than 95% of the market share.

Taiko will be launched on the mainnet on May 27, 2024. As can be seen from the chart below, Taiko TVL reached an all-time high of approximately $190 million on June 5 and has now fallen back to $163.45 million. As a newly launched Layer 2 on the main network, Taiko TVL is lower in price than other well-known Layer 2s, but it is actively expanding its ecosystem. For example, in terms of DeFi applications, Taiko has integrated more than 80 projects such as LayerZero, Stargate, Oku Trade, etc.

According to DeFiLlama data, Taiko's current top three projects in terms of total locked-up value are the decentralized sustainable trading platform DTX, iZUMi Finance's multi-chain DEX platform iZiSwap and Uniswap V3. Overall, the TVL of Taiko ecological projects is not high, and DTX occupies a relatively significant market share.

zkSync and Satrknet are facing ecological difficulties, and the lock-up value has declined after the airdrop

As of now, the total lock-up value of zkSync is US$1.12 billion, an increase of approximately 99% from the beginning of the year. As you can see from the chart below, zkSync’s TVL grew significantly in June, primarily due to its airdrop program announced on June 11. Under the program, zkSync airdropped 3.6 billion tokens to community members on June 17, with a total of 695,232 eligible wallet addresses. However, Nansen data shows that after the zkSync airdrop, more than 40% of primary recipients sold all of the allocated tokens, and 41.4% sold part of it. allocated tokens. Only 17.9% currently still hold the token.

In addition, although the zkSync ecosystem has integrated more than 200 projects,from the data, only 2 projects have a TVL of more than 10 million US dollars. The top-ranked project in TVL is SyncSwap, with a TVL of $35.17 million, making it the absolute leader. Additionally, the top three projects SyncSwap, Koi Finance, and zkSwap Finance have all seen their TVL decline over the past month. Overall, for zkSync, the effects brought by the airdrop are just the beginning, and ecological issues and sustainable development issues are what it needs to focus on.

Similarly, in the first half of 2024, the total Starknet locked value began to rise significantly on February 20, and reached an all-time high of $1.776 billion on March 14. This growth was mainly driven by the STRK token airdrop program and the Starknet Spring DeFi Incentive Program launched by the Starknet Foundation. However, as of now, Starknet's TVL has fallen back to about $685 million, down about 61% from its peak.

In terms of ecological progress, the Starknet ecosystem has currently integrated more than 100 applications. The top five projects on Starknet with total locked-up value are all Starknet native projects. The first place is the lending protocol Nostra, with a locked value of $164.6 million; the second place is the decentralized exchange Ekubo, with TVL increasing by 61.95% in the past month. It currently stands at $77.98 million; the third-ranked loan agreement is zkLend, with a TVL of $26.7 million. However, there are only four projects in the Starknet ecosystem with a TVL of over 10 million US dollars, and Vesu, the fifth-ranked lending agreement, has a TVL of only 3.77 million US dollars.

Number of active addresses and number of transactions

In addition to TVL, the number of active addresses and average daily transaction volume of the network can reflect the performance of the network Actual usage and user engagement. In the first half of 2024, Arbitrum and Base experienced high user activity, while zkSync and Starknet showed a clear downward trend. Optimism and Scroll showed solid, albeit relatively small, growth.

Arbitrum’s active addresses surged by 140.7%, and Base’s daily transaction volume exceeded 4 million

Since the beginning of 2024, Arbitrum’s number of active addresses increased by 140.7%. This growth has been driven by Arbitrum’s massive subsidy and funding strategy. For example, in June the Arbitrum community passed A proposal was made to provide three-year support for the Arbitrum ecological game with a total amount of 200 million ARBs, and allocated US$25 million for project management and operations. Additionally, the Arbitrum Foundation provided financial support to 13 projects in May, including DODO and Double. However, Arbitrum’s average daily trading volume only increased 43.7% from the beginning of the year, an increase smaller than the increase in the number of active addresses. This may be due to a large number of new users who have created addresses but do not trade frequently, or mainly low-frequency trading activities.

Currently, Base’s average number of daily transactions and number of active addresses are currently higher than those of Arbitrum. As you can see from the chart below, at the beginning of 2024, Base had only 330,000 daily transactions, while Arbitrum had about 1 million. Starting in March 2024, Base’s daily trading volume began to increase significantly, reaching a new high on June 27. As of July 22, Base’s daily transaction count reached more than 4 million, nearly twice that of Arbitrum. At the same time, the number of active addresses on Base is also rising, now surpassing Arbitrum and reaching more than 600,000. In addition to the impact of Meme coins and SocialFi, the smart wallet launched by Coinbase also played an important role in improving user experience and transaction volume. The smart wallet provides a simplified, gas-free on-chain experience, allowing users to create a free, secure, self-hosted wallet in seconds, significantly improving user convenience in transactions.

Both the number of active addresses and the number of daily transactions in zkSync and Starknet have experienced significant declines

In the first half of 2024, the number of active addresses and the number of daily transactions in the zkSync ecosystem have both experienced significant declines. At the beginning of the year, zkSync ranked first in the number of active addresses, but then gradually declined. As can be seen from the chart below,in the month since the zkSync airdrop on June 17, 2024, the number of active addresses on the network has decreased by approximately 83.5 %. This suggests that most users are just there to get the airdrop. In addition, zkSync’s average daily transaction volume has also begun to decline since the beginning of the year, and is currently down approximately 86% from the beginning of the year. Similar to the number of active addresses, the average daily transaction volume dropped significantly in the month following the airdrop.

On July 2, zkSync announced the launch of zkSync 3.0 Elastic Chain, an infinitely scalable ZK Rollup network. zkSync stated that this solution achieves native, trustless, low-cost interoperability between ZK chains. However, it still takes time to verify whether it can seize the market share of Optimism’s Superchain and Polygon’s AggLayer in the market.

Similar to zkSync, Starknet also experienced a decline in its average daily transaction volume and number of active addresses in the first half of 2024. As of now, Starknet’s average daily trading volume has dropped by approximately 64.2% from the beginning of the year, while the number of active addresses has dropped by approximately 92% from the beginning of the year. Among the several Layer 2 solutions selected in this article, Starknet ranks last in terms of daily transaction volume and number of active addresses. As can be seen from the figure, the number of active addresses and daily transaction volume of Starknet had a small increase at the beginning of the year, mainly due to the airdrop plan in February. However, after the airdrop, its number of active addresses and average daily transaction volume began to gradually decline. In the future, Starknet also plans to airdrop approximately $400 million in STRK tokens.

However, Starknet has a number of updates planned for the second half of the year. The Starknet community has released v0.13.2 and summer roadmap updates, with v0.13.2 expected to be available in August and v0.13.3 between October and November. At the recent ETHCC Summit in Brussels, Eli Ben-Sasson also announced that Starknet will open for staking by the end of 2024.

Optimism and Scroll grew steadily, with active addresses increasing by 35% and 13.4% respectively

Optimism's development in the first half of 2024 was relatively stable. The average number of daily transactions and the number of active addresses has increased slightly compared with the beginning of the year. The number of active addresses has increased by 35% and the average number of daily transactions has increased by 14%. As you can see from the chart below,Optimism has small spikes in the number of active addresses and average daily transactions, and these fluctuations may be related to specific developments or market activity. For example, Optimism announced in May that L3 built using OP Stack can now join the super chain and be eligible for Retro funding, airdrops, growth events, and more. In addition, Optimism’s Retro Funding will be distributed in four rounds starting in May, with a total of 850 million OP allocated to fund projects or people in the ecosystem. These activities and incentives may have contributed to the increase in the number of active addresses.

In the first half of 2024, Scroll’s number of active addresses increased by 13.4% from the beginning of the year, and its average daily trading volume increased by 27.7%. Unlike Scroll TVL, its number of active addresses and average daily transaction volume have not increased much.

After the Taiko mainnet went online, the number of active addresses dropped by 78.3% from the peak value

As can be seen from the figure below, the number of active addresses of Taiko dropped sharply between June 4 and 5. It rose and then began to fall. The main reason may be that the TAIKO token was listed on the Bitget exchange on June 5. Since then, the number of active addresses has fallen back, rising slightly after June 11 and then falling again. It is currently around 40,000, a 78.3% drop from its peak. Additionally, Taiko’s average daily transaction volume reached an all-time high on June 30 and currently stands at 1.35 million transactions, down approximately 38.4% from its high point.

In addition, on the mainnet After the line, some community members said that Taiko is more expensive than other L2 protocols on Ethereum. In response, Taiko  responded that this is mainly because it involves more logic and storage. The current implementation uses multiple upgradeable proxies, adding additional delegate call costs. And Taiko's blocks are not proposed or proven in batches. Proposers need to interact more frequently with Ethereum to compete for block space and ensure activity on the chain. Since the on-chain ring buffer has not yet been exhausted, storage write costs are also higher. Taiko said the situation will improve in about 40 to 60 days. It is worth noting that theTaiko mainnet has been successfully upgraded to v1.7.0 on July 2, which is expected to significantly reduce the gas consumption of the Rollup protocol on Ethereum.

Summary

In general, both old Layer2 projects and new Layer2 projects have shown diversified development trends in the first half of 2024 . But there are some problems in the space, such as zkSync and Starknet’s declining user engagement after airdrops, reflecting an over-reliance on short-term incentives. Although Scroll and Taiko have experienced significant TVL growth, they have encountered challenges in maintaining user activity and require more comprehensive ecological development. This also means that as the market continues to evolve, major Layer 2 projects still need to continue to innovate and expand to ensure sustainable growth and user engagement.