By
Mayowa Adebajo
June 17th, 2024
The surge in Layer 2 adoption can be traced back to the recent green light given to spot Ethereum ETFs by the US SEC.
The total value locked (TVL) of Ethereum Layer 2 networks has reached an all-time high of $47 billion, marking a remarkable 10-fold increase since March. This milestone emphasizes the growing adoption and utility of Layer 2 solutions within the Ethereum ecosystem.
According to data from L2BEAT, the current TVL of all canonically bridged, externally bridged, and natively minted tokens on Ethereum Layer 2 networks stands at $47.45 billion, setting a new record. Arbitrum One is the leading network with a TVL of $19.3 billion, followed by OP Mainnet at $7.86 billion and Base with $6.94 billion TVL.
Blast, Mantle, Linea, and Starknet are other networks with over $1 billion in TVL. L2BEAT reported a 17.39% increase in TVL across all Layer 2 networks in the past seven days, signaling continued growth and momentum in the space.
Regulatory Approval Sparks Surge
The surge in Layer 2 adoption can be traced back to the recent green light given to spot Ethereum exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC). This pivotal approval, endorsed by major players like BlackRock, Fidelity, Grayscale, and Bitwise, has injected a fresh wave of confidence among investors and stoked demand for Ethereum-centric investments.
Building on the earlier nod granted to spot Bitcoin ETFs in January, this regulatory milestone is poised to amplify investment flows and enhance liquidity within the Ethereum ecosystem.
Looking forward, Ethereum’s core developers have unveiled plans for the upcoming major network upgrade, Pectra, slated for the first quarter of 2025. This strategic overhaul is set to further tackle scalability and performance challenges within the Ethereum network, laying the groundwork for improved transaction throughput and user experience.
With extensive community involvement, developers have pinpointed Q1 2025 for implementation, prioritizing thorough testing, and a seamless transition period.
VanEck Forecasts Bright Future for Layer 2 Networks
VanEck, a global fund manager, is optimistic about the future prospects of Ethereum Layer 2 networks. The firm projects a valuation of over $1 trillion for these networks by 2030.
VanEck estimates that Ethereum has the potential to capture 60% of the market share across all public blockchains. In this scenario, with a projected volume of assets within the Ethereum ecosystem, Layer 2 networks alone could achieve a market cap of $1 trillion.
Despite its ambitious targets, VanEck remains cautious about the long-term value prospects for the majority of Layer 2 tokens. The firm’s anticipates a future dominated by thousands of use-case-specific Layer 2 solutions, with only a few major players in the broader market. The firm anticipates a shift towards zero-knowledge framework (ZKU) solutions for most roll-ups, marking a pivotal evolution in the Layer 2 ecosystem.