The Ethereum network has registered a huge influx of Layer Two (L2) scaling solutions, led by Base, but some observers are worried about its declining revenue.
The Ethereum (ETH) network has grown to a major Web3 space, with a total value locked (TVL) by its decentralized financial (DeFi) protocols of over $44 billion and a stablecoins market cap of more than $80 billion. The Ethereum’s core developers, led by co-founder Vitalik Buterin, have over the years advocated for layer two scaling solutions to decongest the mainnet and ensure sustainable scalability and a secure ecosystem.
As a result, more Web3 developers have been working on Ethereum’s scaling solution mostly through zero-knowledge (ZK) technology. In the latest entrance, Uniswap Labs, the largest on-chain marketplace on the Ethereum network and supporting other blockchains, announced the launch of its layer two network dubbed Unichain, a cross-chain interoperability, and a decentralized validator network.
Base Network Emerges as Top Performing Ethereum’s L2
As the Ethereum network attracts more institutional investors, as observed by the approval of the spot Ether ETFs, the growth of its L2 scaling solution remains palpable. Although the Ethereum network has registered a major decline in revenue collected due to more transactions settled on L2s, the future of ETH remains brighter.
In Ethereum’s L2 space, Base network, a scaling solution backed by Coinbase Global Inc (NASDAQ: COIN), has emerged as the victor among dozens of other projects.
According to the latest market data, Base Network has a total value locked (TVL) of about $2.47 billion and a stablecoins supply of around $3.77 billion. Some of the top-performing DeFi protocols that leverage the Base network include Aerodrome DEX, Uniswap (UNI) DEX, AAVE V3 Lending, and Extra Finance, Morpho Blue, among others.
Remarkably, the Base network has more than 1.3 million daily active addresses and a daily traded volume of about $1 billion. In the past 24 hours, the Base network collected total revenue of about $136k through transaction fees, thus proving to be economically feasible for web3 users.
The Base network has outperformed other Ether’s layer two scaling solutions led by Arbitrum (ARB), Optimism (OP), and Polygon (POL) among others. As of this report, the Arbitrum network trailed closely to the Base network with a total value locked of about $2.39 billion and a stablecoins market capitalization of around $4.47 billion.
In terms of users, the Arbitrum network registered a total of 543K active addresses in the past 24 hours and a trade volume of about $679 million.
Direct Market Impact
The notable growth registered by the Base network will be a major contributor to Coinbase revenue in the long haul. Moreover, more users can seamlessly tap the Ethereum network through the Coinbase platform at a lower cost and guaranteed security.
Meanwhile, ARB price has been forming a potential reversal pattern after being trapped in a falling trend since March. The mid-cap altcoin, with a fully diluted valuation of about $5.6 billion and a daily average traded volume of about $398 million, has formed a potential triple bottom coupled with a rising divergence in the weekly Relative Strength Index (RSI).
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