This year, the number of transactions on the top Layer 2 networks—Arbitrum, Base, and Optimism—has increased four times, according to IntoTheBlock. IntoTheBlock is a platform that provides smart access to decentralized finance (DeFi) and market intelligence tools.
The number of transactions on the leading Layer 2 networks—Arbitrum, Base, and Optimism—has quadrupled this year.
This growth accelerated notably in Q2, following the integration of EIP-4844 in March, which reduced transaction fees by over 90% pic.twitter.com/FbZzduw26V
— IntoTheBlock (@intotheblock) June 29, 2024
EIP-4844 Upgrade Boosts Layer 2 Network Transactions in Q2 Including Arbitrum
While the rate of increase in transactional volumes was relatively modest in the first quarter, this accelerated in the second quarter of the year. This happened after EIP-4844 was included in the update in March. EIP-4844 is an upgrade that has been developed to help in cutting the transaction fees by a third party of over 90%.
This has made it easy for many people to use these Layer 2 networks since they are charged low transaction fees. Arbitrum, Base, and Optimism are meant to ensure that transactions take shorter time and cost less than on the Ethereum mainnet. It also assists to process more transactions within the same time without experiencing any hurdle.
Arbitrum, Base, and Optimism are the Layer Two scaling solutions based on the Ethereum blockchain. These ones are referred to as Layer 2 solutions because they introduce another layer to enhance the functionality of Ethereum. This additional layer helps in the faster and less costly execution of transactions.
Fee Reductions Propel Layer 2 Networks, Expanding DeFi Ecosystem
Such reductions in fees have surely a positive effect on usage of these networks. Higher fees mean it is more expensive to transact digital currencies like the cryptocurrencies and tokens by transferring them from one place to another. This has made DeFi more open to anyone to use it for a given purpose or the other.
The increase in the numbers of transactions is good for the DeFi ecosystem. This indicates that more people desire to utilize these financial tools and services. Since Layer 2 networks such as Arbitrum, Base, and Optimism are becoming ever more mainstream, they could contribute to the continued expansion of DeFi.
Lastly, Layer 2 networks have noted a significant change in the turnover for this year. This growth has been mainly spearheaded by the integration of EIP-4844 in March when transaction fees reduced by more than 90%. This has ensured that individuals cost-effectively engage DeFi services.