As the base layer of Ethereum remains expensive to use, Layer 2 (L2) protocols are picking up steam. This month, L2 protocols hit a new monthly all-time high (ATH) in gas tariff consumption and also reached a new locked-down total value.

Ethereum L2 protocols guzzle more than 30 billion gas in March

According to data collected by Ethereum client developer Paulo Rebuffo using Dune Analytics (@funnyking), 34.2 billion gas was consumed in settling and proving transactions in L2 protocols. The amount is a new monthly record high for Ethereum L2 protocols.

In particular, the statistic increased gradually during the first quarter. Despite the increase in gas consumption, L2s continue to consume only a small fraction of the maximum daily gas available to the Ethereum network. The average daily gas consumption of L2 is less than 1% of the total of the Ethereum network.

It points to increased activity on L2s as they have become cheaper to use, attracting more transaction volume. This is reflected in the rapid increase in Total Value Locked (TVL) on the L2 protocols.

L2BEAT shows that the TVL on all Ethereum L2s has reached an all-time high of $7.26 billion. The TVL is up 12.89% in the past seven days, the highest percentage increase in one week since November last year. Likewise, the current L2 TVL is an increase of more than 100x from January 2021, when it was approximately $50 million.

As transaction costs remain expensive for protocols running on L1, such as OpenSea and Uniswap, more transactions are likely to be directed to L2. Meanwhile, L2 protocols are not resting on their laurels and are working to get even cheaper.

Among the planned updates of Optimism, an Ethereum L2 that has recently completed a funding round, there are several that will save the users even more costs. Arbitrium, another popular L2, has also implemented a recent upgrade that will cut costs.

ETH is reaping the rewards as it rises

Along with the increasing TVL and gas consumption of layer 2 protocols, the price of ETH has risen. ETH is up 17.3% to date and is currently trading at around $3,400.

One of the reasons driving the price increase is the expected merger event for this year. Judging by a recent update by Tim Beiko, although there is no date for the merger yet, the impact of the Ethereum difficulty bomb that will deter PoW mining and PoS incentives should start to become noticeable from June.

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About the author

Olivia’s interests span the entire cryptocurrency and NFT and DeFi industry. She remains as fascinated with cryptocurrencies today as she was in 2017 when she first started reading about them. She is actively looking for the latest Crypto related stories. When she’s not writing, she tends to her pet Chihuahua or prepares vegan recipes. Reach me at [email¬†protected]



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