Layer-2 All-Time High Gas Spend

Key Insights

• Some of the recent user activity on Arbitrum and Optimism can be attributed to protocol migration from L1 to L2.
• As the top L2 by TVL, Arbitrum has seen almost a 50% increase in transacting addresses per day since October 1.
• Arbitrum is working towards slowly decentralizing, starting with the introduction of new validators into the permissioned pool.

Ethereum rollups execute transactions on Layer-2 (L2) and then batch them to settle on the base layer (L1). L2s pay gas fees for L1 security, but the batching of L2 transactions contribute to cheaper fees for end users. Lately, protocols native to L1 Ethereum have been migrating to L2 and bringing along their users. The resulting lower gas fees have encouraged migration and development of apps on L2 and continue to attract more users.

More and more L1 apps are beginning to migrate to L2. The recent uptick in L2 transactions has driven L2 gas spend to all-time highs (ATHs). L2-native DeFi adoption shows demand for near-zero fees, which is unachievable at the base layer. That said, L2s remain largely centralized and are less established than the Ethereum base layer.

The Great Protocol Migration