Ethereum Layer 2 Hits $5B Locked Value
The total value locked in Ethereum’s Layer 2 ecosystem has surpassed $5 billion due to a market-wide increase.
Wednesday, according to statistics from L2Beat, the total value locked inside the Layer 2 scaling networks of the leading smart contract blockchain surpassed $5 billion, a 9.2% increase over the previous week. Currently, the total value locked on Ethereum Layer 2 is $5.09 billion.
The increase in locked value coincides with a time of favourable market momentum in cryptocurrencies. ETH’s market value has increased by about 20% over the previous week, and it is presently trading at around $1,540. ETH is commonly used as Ethereum’s Layer 2 base asset, hence its growth partially explains the rise in total locked value.
Arbitrum One and Optimism, two Optimistic Rollup solutions that jointly account for more than 80% of the value locked on Layer 2, have witnessed 9.3% and 10.0% increases in total locked value, respectively. Arbitrum One presently has around $2.59 billion, which is more than half of the value locked on Layer 2.
Despite the fact that the ETH increase has helped Layer 2’s locked value reach a new all-time high, it is not the sole cause of the increase. This is a significant week for the Layer 2 ecosystem, as zkSync will deploy zkSync 2.0 on mainnet on Friday. As a consequence, around 19% more money has been moved to the zkSync protocol this week. zkSync is a ZK-Rollup solution that has had slower growth than its main Optimistic Rollup competitors; nonetheless, the project hopes that tomorrow’s debut will provide a boost to the network.
ZK-Rollups use zero-knowledge proofs to bundle transactions and minimize the amount of data necessary to verify transactions on the Ethereum mainnet, resulting in quicker transaction speeds and lower transaction fees. They do not need a protracted dispute period to guarantee security, unlike Optimistic Rollups (it takes about a week to send funds from Arbitrum One back to Ethereum mainnet, for example).
ZK-Rollups have long been promoted as the technology that may help Ethereum prepare for mainstream adoption, despite the fact that Optimistic Rollups now dominate the Layer 2 race. Vitalik Buterin, the developer of Ethereum, said at the Devcon conference this month that they might be “at least as significant to technology as blockchains.”
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