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Ethereum: The race for Layer 2 dominance

Layer 2 projects make Ethereum transactions more efficient.

By Mike Hesp
• 3 min read
Ethereum: The race for Layer 2 dominance

Layer 2 projects make Ethereum transactions more efficient. However, competition in Ethereum's Layer 2 space is intense. Which project is currently leading?

The Ethereum network's capacity is limited. The blockchain is capped at roughly 15 transactions per second. That's not always enough. When the network is congested, fees can become expensive. This happens because gas fees rise with network load. Layer 2 solutions tackle this problem. The protocols can process transactions and smart contracts faster and cheaper. Computations are done off the main blockchain and then bundled back into the Ethereum mainnet. This has sparked a race for market dominance in the Layer 2 space. Security, costs, and speed are the three key metrics. A look at the last month’s transactions shows which project is currently leading.

Rollups in the fast lane

The data shows that most Layer 2 solutions that use rollups make the top ten. Arbitrum One leads with 35.4 million transactions, even ahead of the Ethereum mainnet. Behind it are the NFT platform Immutable X and the decentralized crypto exchange dYdX. The total value locked across all Layer 2 solutions stands at 0.4 billion US dollars. This value has more than doubled since the start of the year.

Arbitrum is also leading in daily transactions. In the past 24 hours, the protocol processed an average of 12.9 transactions per second. In third place is zkSync. The scaling solution was launched just last month. Investors online are speculating about a potential airdrop.

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