How Ethereum Layer-2s have outperformed Layer-1s

• Ethereum Layer-2s have confirmed to be a strong line of protection towards Layer-1s.
• Ethereum’s TVL outperformed Solana and Avalanche and might be gunning for market cap too.

The 2021 bull run uncovered some main drawbacks within the Ethereum [ETH] blockchain. Due to this, the time period “Ethereum killer” gained traction as a technique to describe the various aggressive layers aiming for the highest spot by trying to overthrow the community’s dominance.

How a lot are 1,10,100 ETHs price right this moment?

Quick-forward to the current, and Ethereum continues to be essentially the most dominant PoS blockchain in some key areas. Layer Blockchains like Solana [SOL] and Avalanche [AVAX] have thus didn’t dethrone Ethereum.

The latter’s secret weapon is arguably its Layer-2 networks, which have allowed it to beat the previously-existing scalability limitations.

A latest Grayscale evaluation revealed that Optimism [OP], Base, and Arbitrum [ARB], three Ethereum Layer-2s, have surpassed Avalanche and Solana in TVL.

It is because Ethereum is already miles forward of its competitors by way of adoption and the dApps that function on its community.

Following a interval of sturdy development, high performing Layer 2s #Arbitrum, #Optimism and #BASE are surpassing Ethereum competitor Layer 1s like Solana and Avalanche by way of whole worth locked (TVL) as of 9/25.
Right here’s why that’s necessary. (1/6) pic.twitter.com/DpTJyLQ5Nj

— Grayscale (@Grayscale) September 29, 2023

Layer-2 networks efficiently help Ethereum in bypassing its earlier limitations. The L2s facilitate transaction processing, permitting the dApps to function effectively and cheaply. There’s one key part that has allowed Layer-2 networks to surpass some Layer-1 blockchains.

Whereas the latter must construct up their very own dApps and clientele, Layer-2s profit from Ethereum’s already current dApps, of which there are loads. On high of that, the identical Layer-2s are additionally capable of appeal to dApps on their very own.

Layer 2 blockchains course of transactions from dApps after which “batch” them collectively earlier than sending a compressed model again to the principle community for settlement, performing as a aspect street or perhaps a devoted bus lane augmenting a significant freeway. (2/6)

— Grayscale (@Grayscale) September 29, 2023

Can Ethereum Layer-2s safe market cap dominance?

These observations confirmed that Ethereum was nonetheless capable of command sturdy utility and demand at press time. However whereas its Layer-2 networks loved sturdy TVL development, they have been nonetheless lagging behind Solana and Avalanche by way of market cap.

Supply: Santiment

In accordance with the newest information, Solana’s market cap was barely over $8.8 billion, whereas Avalanche had a market cap of $3.27 billion on the time of writing. The closest of the aforementioned Layer-1s was Arbitrum at $1.17 billion, adopted by Optimism at $1.06 billion.

Base had the bottom market cap amongst them, at $530 million.

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It is sensible that the Layer-2s would have decrease market caps, contemplating that their counterparts are Layer-1 networks which were round for longer. Nonetheless, the Layer-2 market caps highlighted their speedy development.

Judging by these components, it’s potential that they may get nearer to Solana and Avalanche. These numbers additionally spotlight the truth that it’s now tougher to beat Ethereum than ever earlier than.