The total value locked (TVL) on Ethereum layer two (L2) networks has increased to a new high as gas fees continue to rise, promoting adoption.
The total amount of value locked across various L2 protocols and networks has reached an all-time high of $5.64 billion, according to layer 2 analytics platform L2beat.
Layer 2 features
L2 scaling solutions offer substantially better transaction throughput and lower transaction fees, and they saw a surge in adoption in November, when the Ethereum network experienced the highest average gas fees in history.
Arbitrum controls the lion’s share of the L2 market, accounting for $2.67 billion, or roughly 45% of the total.
The dYdX decentralized derivatives exchange is in second place with $975 million in TVL, and the Loopring L2 DEX is in third place with $580 million in TVL, but its own LRC currency accounts for the vast bulk of its value frozen.
Since the beginning of October, Layer 2 TVL has more than doubled, rising 110% from $2.68 billion to current levels.
Increase in gas fee
Per the Bitinfocharts, the average Ethereum transaction fee is currently approximately $40. On Nov. 9, they reached their second-highest ever level of around $65 and had risen by 700%.
Based on Etherscan, a basic ERC-20 token transfer costs roughly $45 at the moment, while a more involved smart contract interaction or Uniswap swap costs a painful $140.
Though domain names are inexpensive (costing just a few dollars per year), using the Ethereum Name Service can result in charges of hundreds of dollars in gas each name registration.
Since October, investors and developers have been flocking to multichain compatible DeFi platforms to avoid the Ethereum network’s skyrocketing gas prices.
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