Arbitrum Leads the Way in Layer 2 Market Boom

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GMO-Z.com Trust Company

3 min readMay 2, 2023

The Layer 2 market has experienced significant growth since last year, and this trend has continued with even greater momentum since the beginning of this year. On April 17, the total value locked (TVL) on Layer 2 protocols reached an all-time high of $10.7 billion, demonstrating the increasing interest in these solutions. Although the TVL has decreased since then, it remains at an impressive $9.5 billion, more than twice the amount at the start of the year.

Growth of the Layer 2 Market

Arbitrum Leads the Way

According to the data on L2Beat, Arbitrum is the dominant protocol in the Layer 2 scaling space, accounting for 66% of the market share. After Arbitrum officially announced its long-awaited native token $ARB and the airdrop, the TVL has continued to rise even more, reaching a new record of $7 billion on April 17, almost triple the amount in January. In the meantime, its competitor Optimism also reached an all-time high of $2.1 billion on the same day, capturing about 20% of the Layer 2 market.

Rising of ZK Rollups

While Arbitrum remains the dominant protocol in the Layer 2 market, the interest in zero-knowledge (ZK) rollups such as Polygon zkEVM and zkSync Era is rapidly growing. zkSync Era, launched on March 24, has rapidly grown and has become the third most popular Layer 2 solution with over $100 million in TVL within just ten days. In the meantime, Polygon announced the final mainnet for its zkEVM product. The Polygon zkEVM has already attracted over $5.5 million since its launch.

Although achieving EVM equivalence is more complex for ZK rollups than optimistic rollups, they offer higher security and faster finality times than other scaling solutions. The cryptographic proofs generated by ZK rollups ensure the authenticity of transactions, making them highly secure and fast with finality times.

Read more ▶ zkSync Era: An Exciting Step Forward for Ethereum’s Scalability and Growth

DEX Activities on Layer 2

DEX activities on Layer 2 platforms have significantly increased alongside their market growth. According to DefiLlama’s data, Arbitrum ranks second only to Ethereum in DEX transaction volume since March. Uniswap leads the DEX transaction volume on Arbitrum with a TVL of $3.08 million, followed by Curve with $92 million, and Sushiswap with $86.8 million.

While Optimism’s trading volume is lower than other blockchains, it has consistently maintained a monthly DEX trading volume between $1.5 billion to $2 billion this year.

Trading on Arbitrum Uniswap

Uniswap is one of the top DEXs in the DeFi field and has just announced on April 25 that its protocol has officially passed $1.5T in trading volume. Trading on Uniswap provides liquidity and ensures that trades are executed efficiently, making it an attractive option for traders who want to save on transaction costs.

Now users can trade JPY stablecoin GYEN through the USDC/GYEN pair on Uniswap.

Trade GYEN on Arbitrum Uniswap ▶▶ USDC/GYEN

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Disclaimer
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