Ethereum Layer 2: Activity Report October 2024

LALilian Aliaga

November 13, 2024

Ethereum Layer 2: Activity Report October 2024

In this activity report for October 2024, we detail the financial, on-chain and fundamental metrics of Ethereum's main layer 2 blockchains (Arbitrum, Base, Optimism, Scroll, Linea, etc.) to provide a clear, actionable picture of how this sector is evolving.

Key Information

  • This report studies the 9 main Ethereum layer 2 blockchains (we decided to remove Mode) on financial, on-chain, and fundamental aspects.
  • On-chain activity has generally increased, driven by the trio of the most popular layer 2s: Arbitrum, Base, and Optimism.
  • Scroll shows a significant rise in user activity despite a drop in TVL, likely due to the airdrop distribution.
  • Fees generated by layer 2 networks rose by 60% in October 2024, partly due to the return of activity and the general increase in network fees.
  • Expenses for layer 2s to store their transaction data on Ethereum increased by 50% as demand continues to grow.

Financial Analysis

financial-data-l2-oct-24.webp

October ended with a Bitcoin (BTC) price increase of 11%. Despite this, the main layer 2 blockchains saw uniformly bearish performances, with the sector’s total market capitalization falling by 4.8% in October 2024.

Note that Base and Linea do not (yet) have a native token, and Scroll launched the SCR token during the month. For the others, the worst performances were recorded by Blast (-21%), Starknet (-15%), Arbitrum (-12%), and Optimism (-8%), while Mantle and zkSync both declined by around 4%.

Note: It is important to mention that in October 2024, only the memecoins, layer 1 blockchains (boosted by Bitcoin and Solana), and DeFi sectors (supported by the Solana ecosystem) were in the positive. This underperformance of the main layer 2 blockchain tokens is therefore not surprising in the context of October's market.

On-Chain Activity Analysis

DEX Volume and Active Addresses

On-chain activity on the main Ethereum layer 2 networks was particularly varied in October 2024. One of the most interesting metrics to measure this phenomenon is the number of unique addresses that interacted with the network at least once, which rose from 2.18 million to 2.22 million across the sector, a slight increase of 1.68%.

on-chain-metric-l2-oct-24.webp

Looking at these numbers in more detail, Scroll shows a sharp 44% increase in active users, Optimism 22%, Base 9%, and finally Arbitrum 8%. In contrast, Linea’s activity dropped by 52%, Mantle by 43%, Starknet by 26%, zkSync by 48%, and Blast by 12%.

Another interesting metric to analyze is the volume processed by decentralized exchanges (DEX), which increased by 53.7% in October 2024 across the sector, from $32.9 billion to $50.6 billion. Most layer 2 networks saw a similar increase, except for Blast (-15%), zkSync (-5.4%), Linea (-4.8%), and Starknet (-0.7%).

Note: Scroll conducted the SCR token airdrop in October. Since this event, TVL (analyzed later in this report) has seen a significant drop, despite a 44% increase in active addresses and a 46% increase in DEX volumes. This is likely due to users selling their airdrop and leaving the chain.

To summarize, we see a certain logic in the performance of the trio Base, Optimism, and Arbitrum, the most popular layer 2s. In October, they recorded particularly positive on-chain activity metrics, reflecting a renewed interest in Ethereum layer 2 networks.

Total Value Locked (TVL)

tvl-en-l2-oct-24.webp

The Total Value Locked (TVL) of the Ethereum layer 2 blockchain sector saw a minor decrease of $17 million in October 2024. Looking more closely, we see greater variation between networks, though most follow the month’s general trend.

Arbitrum, Linea, Starknet, and zkSync showed moderate declines of a few million dollars each. However, Scroll experienced a loss of users and capital in October following its SCR token airdrop. Scroll’s TVL dropped by $240 million, nearly 50%, in about thirty days.

Finally, Base and Mantle recorded significant growth, especially toward the end of the month, with respective increases of $472.4 million and $65.6 million.

Cost and Revenue Analysis

Fees generated by the main Ethereum layer 2 networks increased significantly in October 2024, from $4.3 million to $6.9 million, representing a 60% rise.

fees-cost-l2-oct-24.webp

With the exception of Optimism (-35%), Blast (-14%), and zkSync (-2.8%), the remaining layer 2 blockchains followed the general trend. Base continues to represent the majority of fees generated in the sector (60%) and shows enormous growth of 134%, with $4.2 million in October.

It is interesting to note that this increase in fees generated by Ethereum layer 2s does not align with on-chain activity (recall that the number of active addresses remained almost the same in October). Of course, the impact of Base and Arbitrum (for which activity metrics increased) is not negligible, but this discrepancy is also explained by an increase in average fees across layer 2 networks.

One reason for this is the growing demand for storage space for layer 2 transaction data on the Ethereum mainnet (the so-called blobs introduced by EIP-4844). With the multiplication of layer 2s, competition intensifies, and the 3 blobs per block limit will likely be exceeded soon, driving transaction fees up.

This observation is also reflected in the costs incurred by layer 2s for posting transaction data on Ethereum for the various blockchain overlays. Although this cost has drastically decreased since EIP-4844, that is not the focus here. In October 2024, layer 2s spent a total of 394 ETH, 50% more than in the previous month.