Layer 2 networks hit $13 billion TVL but challenges still remain

10 months ago

Ethereum Layer 2 networks reached a caller milestone connected November 10, reaching $13 cardinal of full worth locked (TVL) wrong their contracts, according to information from blockchain analytics level L2Beat. According to manufacture experts, this inclination of greater involvement successful furniture 2s is apt to continue, though immoderate challenges remain, particularly successful the realms of idiosyncratic acquisition and security.

According to L2Beat, determination are 32 antithetic networks that suffice arsenic Ethereum furniture 2s, including Arbitrum One, Optimism, Base, Polygon zkEVM, Metis, and others. Prior to June 15, each of these networks combined had little than $10 cardinal of cryptocurrency locked wrong their contracts, and their combined TVL had been declining since April’s precocious of $11.8 billion.

But opening connected June 15, furniture 2 TVL maturation turned positive. And by October 31, these networks had reached a caller precocious of astir $12 cardinal combined TVL. From there, concern successful furniture 2 apps continued to climb, passing the $13 cardinal TVL people connected November 10 and continuing to astir $13.5 cardinal astatine the clip of publication.

This emergence successful TVL is adjacent much melodramatic erstwhile compared with the complaint that existed during the bull marketplace of 2021, erstwhile wide crypto concern was overmuch larger than it is today. On November 12, 2021 erstwhile the marketplace headdress of each cryptocurrencies reached an all-time precocious of $2.82 trillion, furniture 2s had little than $6 cardinal locked wrong their contracts. Today, the full marketplace headdress of cryptocurrencies is simply a much humble $1.4 trillion, according to Coinmarketcap, yet the TVL of furniture 2s is greater than ever.

In a speech with Cointelegraph, Metis CEO Elena Sinelnikova projected a mentation for wherefore furniture 2s are increasing successful spite of the continuing carnivore market. According to her, Ethereum’s precocious state fees during the bull marketplace near an indelible interaction connected users, starring to a tendency for alternatives erstwhile request started to travel back, arsenic she stated:

“At the clip of [the] bull market, Ethereum astatine highest times was precise non-scaleable, which meant that transactions were dilatory and precise costly due to the fact that of the bull market. It would beryllium hundreds of dollars conscionable successful transaction fees for 1 transaction, truthful so it was not sustainable.”

According to Sinelkova, different crushed that furniture 2 networks person thrived successful the carnivore marketplace is due to the fact that of the palmy selling efforts of their improvement teams, which has led to precocious idiosyncratic enactment and therefore, precocious yields. “They are deploying superior to pull caller users and to pull caller concern into DeFI [decentralized finance],” she stated. “DeFi radical from each ecosystems, they ever spell wherever determination are large yields [...] and this is conscionable people happening and is [...] the quality of business.”

However, Sinelkova warned that furniture 2s inactive look challenges successful the realm of user-experience. Optimistic rollup networks necessitate users to hold 7 days for a withdrawal to beryllium processed, which tin pb to frustration. On the different hand, newer zero-knowledge (ZK) impervious networks tin process withdrawals instantly, but they are inactive successful an aboriginal signifier of improvement and thin to clang much often than older networks. The Metis CEO claimed that her squad is moving connected a “hybrid” furniture 2 web that volition harvester the champion of some worlds, giving users the enactment to retreat utilizing either an instant ZK prover oregon a 7-day optimistic process.

Kelsey McGuire, main maturation serviceman for furniture 1 web Shardeum, told Cointelegraph that furniture 2s look different superior situation that is often overlooked: centralization. “While Layer-2 solutions person gained popularity for their scalability enhancements implicit the past year, they often present a trade-off successful decentralization” she stated. She continued:

“At the execution layer, wherever transactions are processed, centralized sequencer nodes are employed, raising concerns astir imaginable censorship oregon authorities interference. This centralized facet successful Layer-2 implementations challenges the halfway principles of decentralization and trustlessness that person underpinned the blockchain space."

McGuire expects contention from furniture 2s to spur improvements to furniture 1s, yet starring to higher throughput for the foundational layers themselves, arsenic she stated “there whitethorn beryllium less and less caller L1s, and we’ll commencement to spot a refocus connected existent scalability (as successful precocious TPS paired with debased state fees) astatine the foundational furniture arsenic opposed to relying solely connected L2s to supply scalability."

In summation to their TVL increasing, the fig of furniture 2s besides continues to rise. On November 14, crypto speech OKX announced that it is gathering a furniture 2, and determination person been rumors that Kraken is gathering 1 arsenic well.

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