The widespread embrace of Ethereum’s layer-2s has been prominently highlighted by the recent data shared on November 6th via Token Terminal. The data was released by Erik Smith, the Chief Investment Officer (CIO) of 401 Financial. The statistics from the renowned blockchain analytics platform reveal that the average number of active Ethereum addresses over the past three months has surpassed a staggering 10 million mark. This figure demonstrates an impressive near-doubling expansion since the dawn of 2023.
The Ethereum Layer-2 landscape is seeing a continuous surge in adoption, as shown by the analysis of recent data. Polygon, an Ethereum sidechain, holds its position as the most widely used. Other platforms leveraging roll-up technology, such as Arbitrum and OP Mainnet, are also seeing active usage. Yet, it is evident that OP Mainnet’s share is facing a slow and steady decrease. Other emerging players like Base, a layer-2 solution backed by Coinbase, and StarkNet, are gradually carving out their market share, showing notable expansion in their share over the last quarter.
For those unfamiliar with the crypto landscape, it’s important to understand that in this context, active addresses are simply referring to the individual wallet addresses, either sending or receiving, that have interacted with the Ethereum blockchain during a given period. These active addresses can be critically examined to gauge user sentiment and the level of uptake. In dragon-slaying bear market phases, the activity nosedives, and conversely, begins an ascension when the bulls regain control, signifying a potential rush for exciting opportunities.
The active addresses’ recent resurgence aligns with the swift growth of leading cryptocurrency prices. Ethereum’s price trajectory is nudging the $1,870 resistance level, with a decisive breakout giving the potential of further bullish action that might result in the coin retesting the $2,100 mark and possibly achieving new highs for 2023. Commonly, rising crypto prices reignite demand, increasing the number of active addresses and influencing variables such as the total value locked (TVL) in the realm of decentralized finance (DeFi).
Ethereum, as the world’s most active smart contract platform, has preserved its dominance, mainly due to being the early bird that caught the worm. As a result of its first-mover advantage, this blockchain is the home of an immense range of DeFi, non-fungible tokens (NFTs), and gaming activity. Depending on their objectives, deployed protocols can choose to launch on either the mainnet or on a layer-2 solution.
The advantage of layer-2 solutions is that, while they rely on the mainnet for security, they enhance efficiency by off-loading transactions off-chain. This approach permits a greater number of transactions to be processed in a more cost-effective manner, easing the load on the mainnet.
Ethereum’s base layer is highly secure, yet its peak transaction throughput stands relatively lower at about 15 transactions per second (TPS). Consequently, during periods of high demand, gas fees can inflate, curtailing user demand. However, currently, Ethereum gas fees are hovering near multi-year lows at approximately 23 Gwei, as shown by tracking monitors. This figure has dramatically fallen from anticipated peaks that touched 240 Gwei in February 2021, an era that saw crypto assets swiftly appreciating.
What the future holds for gas fees as markets recover remains uncertain. Nonetheless, it is evident that the increasing preference for layer-2 solutions by users will likely alleviate pressure on the mainnet, ensuring stability in gas fee fluctuations.
