Ethereum’s layer-2 (L2) networks have reached an all-time high in total value locked (TVL), surpassing $51.5 billion—an increase of 205% from $16.6 billion in November 2023.
Ethereum’s layer-2 (L2) networks have reached an all-time high in total value locked (TVL), surpassing $51.5 billion—an increase of 205% from $16.6 billion in November 2023, according to L2beat data. This surge reflects a growing interest in Ethereum-native assets and the importance of L2 solutions for scaling Ethereum by reducing congestion, transaction costs, and wait times on the mainnet.
Arbitrum One and Base led the growth, holding $18.3 billion and $11.4 billion in TVL, respectively. Together, they account for over half of the total L2 TVL. In the week leading up to Nov. 28, Arbitrum’s TVL rose 12%, while Base saw an 11.4% increase. Base also broke records with 106 transactions per second (TPS) on Nov. 26, driven by activity around meme coins. Its total transactions have crossed the one billion mark.
The Ethereum Dencun upgrade in March 2024 played a key role in this expansion. The upgrade, which introduced EIP-4844, stabilized fees across L2 networks and significantly increased network capacity. Some L2 platforms, such as Starknet, Optimism, Base and Zora OP Mainnet, saw a 99% reduction in median transaction fees after the upgrade. According to Nick Dodson, co-founder of Fuel Labs, the focus was on scalability rather than merely lowering fees.
Despite these advancements, challenges remain. Alvin Kan, COO of Bitget Wallet, pointed to liquidity fragmentation as DeFi protocols on L2 networks compete for resources. Additionally, the growing dominance of L2s has raised concerns that they could divert revenue from Ethereum’s mainnet and limit Ether’s price potential.
Other L2 networks also contributed to the growth. Optimism holds $7.99 billion in TVL, while ZKsync Era reached $1.12 billion. Smaller networks like Linea and Starknet showed double-digit growth percentages, signaling broad adoption across the ecosystem.
Base’s recent milestones reflect the increasing competitiveness among Ethereum L2 solutions, which now rival high-speed blockchains like Solana. Starknet, for instance, plans to quadruple its TPS and lower fees further in the coming months.
Ethereum’s native cryptocurrency, Ether, has shown resilience, recovering to $3,579 after falling to $3,000 last week. CME exchange data indicates strong investor confidence, with futures open interest hitting new highs. While some in the industry worry about the potential trade-offs between L2 scalability and mainnet revenue, the record-breaking TVL demonstrates the continued strength and adaptability of the Ethereum ecosystem.
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