The Evolution of the Landscape between Ethereum L2 and Public Chains

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

1. Distribution of DeFi TVL and Trading Volume

Arbitrum and Optimism's TVL rankings have gradually entered the top ten from outside the top ten. In terms of DeFi TVL, Arbitrum ranks fifth, only behind Ethereum, a certain trading platform, Tron, and Polygon, surpassing Avalanche, Solana, and others. Optimism ranks eighth, also surpassing most public chains.

In terms of 24-hour DeFi trading volume, Arbitrum ranks third, and Optimism fifth. Arbitrum is second only to Ethereum and a certain trading platform, surpassing the vast majority of public chains. Optimism is only behind Ethereum, a certain trading platform, 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 major DeFi protocols on L1 such as Aave, certain DEX, Synthetix, Perpetual, etc., are all providing services on L2.

Some native L2 projects also show potential. For example, on Arbitrum, the game ecosystem project magic network ) TreasureDAO ( attempts to build a web3 Nintendo, providing underlying services for different games and initially showcasing an ecological prototype. Currently, some games are gaining attention ) such as thebeacon, which launched its initial prototype less than two weeks ago and has over 20,000 independent addresses (. In terms of DeFi projects, GMX has a total trading volume exceeding $70.9 billion on Arbitrum, with total fees exceeding $9.3 million.

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

Currently, the popular monthly active projects on Arbitrum include certain DEXs, GMX, Hop, TreasureDAO, Galxe, StarGate, dopex, etc.; on Optimism, there are certain DEXs, Perpetual, synthetix, Velodrome, Rubicon, Pooltogether, Thales, etc.

The L2 ecosystem projects have begun to take shape. Over time, due to better portability, as costs decrease and throughput increases, the pace of ecosystem development will accelerate. Currently, the L2 ecosystem has surpassed most public chains.

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3. Active Address Count

In terms of daily active users, a certain trading platform, Ethereum, and Solana are higher than Arbitrum and Optimism, while Avalanche is at the same level as Arbitrum and Optimism.

In terms of trends, Ethereum's daily active users are relatively stable, showing a slight increase over the past six months; a certain trading platform is relatively stable; Solana was stable in the early stages but has decreased in recent months; Avalanche has declined over the past six months; in comparison, Optimism's daily active users have significantly increased, rising from less than 10,000 six months ago to 30,000-40,000; Arbitrum has also seen a notable increase, rising from around 15,000 six months ago to 40,000-50,000.

As time goes on, especially after the launch of EIP-4844, there is still room for improvement in L2 daily active users. In the next 2-5 years, the ranking of L2 daily active users may undergo significant changes.

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4. Trading Quantity

Currently, the daily transaction count for Ethereum is about 1 million, Arbitrum around 360,000, and Optimism approximately 350,000. Over the past year, the transaction volume of L2 has continued to rise, while the Ethereum mainnet has remained relatively stable. It is likely that the long-term transaction count of L2 exceeding that of Ethereum L1 will soon be achieved. The internal consensus messages on Solana are also counted as transactions, and their numbers are much higher than those of other chains.

It should be noted that the number of transactions cannot fully reflect chain activity; low fees may result in a large number of low-quality transactions. Attention should be paid to the active dApps in the ecosystem, the number of real active users, and interaction volume to assess transaction quality.

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5. Fees

L2 fees have become cheaper, with the cost of sending Ether and exchanging tokens ranging from a few cents to several dimes. Currently, sending Ether on Arbitrum costs about a few cents, while exchanging tokens costs from a few cents to several dimes. The fees have significantly decreased compared to before, with sending Ether being more than 10 times cheaper than L1.

The fee advantage of Solana is the most evident, with a total fee of only 99.17 SOL in 24 hours and an average transaction fee of 0.0000057 SOL.

Except for Solana, the cost advantages of other public chains are not apparent for L2. The fees of Arbitrum and Optimism are comparable to Avalanche and lower than many public chains.

Moreover, Optimistic Rollup and Zk Rollup fees still have dozens of times of reduction potential, mainly depending on Proto-danksharding)EIP-4844( and the implementation of danksharding.

EIP-4844 introduces dedicated data space for rollups, bringing new transaction data types and a dedicated fee market. It uses blobs to carry large amounts of data, avoiding the current block space competition, and is cheaper than calldata. EIP-4844 and danksharding will make Ethereum a unified settlement layer and data availability layer.

After the implementation of EIP-4844, rollup transaction fees will be significantly reduced, theoretically allowing for a hundredfold reduction. Even a mere tens of times improvement will mean that L2 fees will also be greatly reduced, and the cost advantage of most individual public chains will disappear. At the same time, Rollup has advantages in consensus, security bridges, and other aspects, which will affect the competition between L2 and other public chains.

In the early stage of EIP-4844, the costs of Optimistic Rollups may be lower than those of ZK Rollup. As ZK Rollup technology matures, its costs are expected to eventually be lower than those of Optimistic Rollup. Data compression technology will also be implemented on rollups, theoretically allowing for a hundredfold improvement.

If these technologies are implemented, the daily trading volume of L2 is expected to reach tens of millions, providing enough space for DeFi and early games.

In summary, once proto-danksharding and danksharding are implemented, Rollup fees may be lower than those of most monolithic public chains, attracting a large-scale migration of fee-sensitive users. With significantly reduced L2 fees, users and developers will be more inclined to enter the Ethereum network ecosystem.

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6. TPS

The tps claimed by the market is often exaggerated and needs third-party measurement. The tps for token sending and exchanging is different, and the tps for the testnet and the real operation is also different. Tps is related to decentralization; the higher the degree of decentralization, the lower the tps tends to be.

According to a certain capital's benchmark test of token exchanges on Uniswap V2, Ethereum's tps is approximately 9.19, Polygon about 47.67, Avalanche about 31.65, a certain trading platform around 194.6, and Solana approximately 273.34) limited by CU (. The Solana browser shows a tps of around 3000, with 80% being consensus messages, resulting in an actual tps of about 600.

Most chains have a TPS ranging from tens to hundreds, which is several to dozens of times higher than Ethereum L1.

The theoretical TPS of Ethereum L2 can reach 1000-4000, and if Pro-danksharding and danksharding are implemented, it is expected to exceed 100,000 TPS. Initially, it may not reach the theoretical value, but it is expected to be comparable to high-performance single-chain public blockchains. With the implementation of Pro-danksharding for at least 1 year ) and danksharding for 2-3 years (, 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.

L2 does not need to provide large subsidies like new public chains to guarantee security; it only needs to attract developers to build products that promote ecological development.

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The Battle of Ethereum L2 and Public Chain Landscape May End in 5-10 Years

The project is entering the Arbitrum and Optimism ecosystems, with some projects' L2 activity surpassing L1. In the future, DeFi and crypto games may exhibit a similar trend.

As the L2 ecosystem matures, the TVL, active users, and real transaction volumes of Arbitrum and Optimism will gradually surpass most public chains, and may even exceed a few mainstream non-Ethereum public chains. If new public chains cannot achieve more than ten times improvement in terms of fees, speed, and user experience, it will be difficult to surpass L2.

The future will be a multi-chain era, with Ethereum and its L2 solutions most likely becoming the primary networks, alongside a few large chains and ecosystems, as well as many niche chains focused on specific areas.

L2 will become an important competitor to other public chains. If L2 stands out, it will enhance the network effects of the Ethereum ecosystem and solidify its position in the blockchain smart contract field.

L2 has an advantage over non-Ethereum public chains and has a high probability of winning. However, there are still potential variables, such as the sudden emergence of a completely new technological paradigm that could completely disrupt current blockchain scalability. Although the probability is low, it is worth paying attention to.

Currently, the various public chain networks are not in their final form, and the blockchain landscape is far from settled. The real conclusion depends on the true outbreak period of web3.

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