As we segue into March, the Ethereum layer-2 space is continuing to see strong demand: One of its largest scaling solutions, Arbitrum, is seeing renewed exponential growth through subsectors in the ecosystem.
While base blockchains (layer ones, or L1s in crypto-speak) remain the bedrock of the web3 landscape, technology built on top (layer two chains, or L2s) are exploding. Arbitrum recently surpassed the Ethereum chain that it is built on in terms of total transactions processed.
Arbitrum is an L2 Ethereum-focused scaling solution that aims to act like Ethereum but with transactions that cost way less and processing that’s way faster. It makes up about 54% of the market share on Ethereum and has about $3.38 billion total value locked, according to L2Beat data. The TVL, which is tracked through the amount of tokens locked in all escrow contracts for an L2, is near its highest point since May 2022, the data shows.
L2 scaling solutions like Arbitrum, Optimism, Immutable X, StarkWare and others are built on top of layer-1 blockchains like Ethereum. But L2s function in a faster, cheaper way and reduce the load on L1s by bundling up transactions and only recording final results on the main blockchain. That way it doesn’t clog up the network.