Ethereum Layer 2 Hits Record $51B in TVL with 205% Growth

• Ethereum Layer 205 TVL Growth of 2%
• Arbitrum leads with 35% of total TVL
• Dencun update reduces fees by 99% on Layer 2

Total value locked (TVL) on Ethereum’s Layer 2 networks has reached an all-time high of $51 billion, marking a 205% increase since November 2023, when TVL was $16,6 billion. This significant increase reflect the growing investor interest and appreciation of Ethereum's native assets.

Ethereum Layer 2 (L2) networks have achieved a record total value locked (TVL) of over $51 billion.

205% growth from $16.6 billion in November 2023. #Arbitrum One and #base are the leading contributors to this surge, with Arbitrum holding $18.3 billion (35% of total L2 TVL)… pic.twitter.com/ToUvHVQxDJ

— Token Dispatch (@tokendispatch_) November 28, 2024

Layer 2 solutions play a crucial role in the scalability of the Ethereum network by processing transactions on sidechains to alleviate the load on the mainnet. This results in shorter wait times and reduced transaction costs. However, some industry experts have expressed concerns that L2s could be “cannibalistic,” potentially decreasing Ethereum’s mainnet revenue and limiting Ether’s price growth.

Among Layer 2 networks, Arbitrum leads the way with a TVL of $18,3 billion, accounting for 35% of the total. Coinbase’s Base network ranks second with $11,4 billion in TVL, accounting for 22% of the total. In the week leading up to November 28, Arbitrum’s TVL increased by over 12%, while Base’s TVL grew by 11,4%. On November 26, Base hit a record 106 transactions per second (TPS) and surpassed the $10 billion TVL mark for the first time. Base recently surpassed 1 billion total transactions, driven in large part by the memecoin craze during this bull cycle.

At the time of writing, ETH was trading at $3.554,98, down 0.4% over the past 24 hours.

Ethereum’s Dencun upgrade, implemented in March 2024, has played a significant role in stabilizing fees on Layer 2 networks. Nick Dodson, co-founder and CEO of Fuel Labs, highlighted that this upgrade was instrumental in stabilizing fees on Layer 2 networks. He stated, “On the EIP-4844 front, a lot of people talk about reducing fees, but it’s more about stabilizing fees. It’s really more about expanding capacity and scale and not so much about reducing fees.” Following the implementation of the upgrade, several Ethereum Layer 2 networks, including Starknet, Optimism, Base, and Zora OP Mainnet, saw a 99% reduction in median transaction fees.