Ethereum Layer-2s Decline as Base Surges to Record Growth

Base Sees Surge in Activity Amid Decline in Ethereum Layer-2 Networks

Coinbase-incubated Ethereum Layer-2 network, Base, has experienced a significant increase in network activity over the past few months. This growth comes despite a general decline in adoption across other Ethereum Layer-2 (L2) networks, including market leaders like Arbitrum and Optimism.

Declining Performance of Ethereum L2 Networks

According to on-chain data, the combined transaction per second (TPS) across all Ethereum Layer-2 and Layer-3 networks averaged 254.5 TPS over the 24 hours of October 6. This represents a steep 73% decline from the all-time high of 440.4 TPS recorded on August 20. The drop illustrates the recent struggle of Ethereum scaling solutions to maintain traction.

Focusing on L2 rollups alone, the networks recorded their lowest TPS since June 10, with only 101.8 TPS. This marks a 33.5% decline from September 11, when TPS stood at 153.2.

Arbitrum and Linea Lead the Decline

• Arbitrum: On October 6, Arbitrum recorded 429,000 active addresses, significantly lower than its all-time high of 1.13 million on May 19. Additionally, its transaction count dropped by 35.7%, from 2.65 million transactions on June 25 to 1.7 million.
• Linea: Linea’s user count plummeted 87% from its peak of 765,777 on July 21 to fewer than 100,000 users by October 6. Its throughput also dropped 95%, from 55.7 TPS on March 31 to just 2.58 TPS. The decline in Linea activity is attributed to the end of its point farming period, which incentivized users to accumulate points for an upcoming airdrop.

Other networks such as Xai and PlayBlock also saw declines, with Xai’s throughput falling over 50% to 66 TPS, and PlayBlock’s TPS dropping 17% from an all-time high of 18.1 TPS on September 30.

Base Emerges as a Strong Performer

While most Ethereum scaling solutions are seeing declines, Base has emerged as an outlier. On October 4, Base hit a record high of over 66 TPS, showcasing increased transaction volume and speed.

• Base accounted for over 17% of all active addresses on Ethereum Layer-2 networks over the last seven days.
• The network recorded an all-time high of nearly 1.52 million active addresses compared to 8.82 million addresses across all L2 networks.

Despite the overall drop in L2 activity, Base’s recent growth highlights its resilience. The network has rapidly risen to become the second-largest Layer-2 network by total value locked (TVL) within just a year of its launch. In fact, Base is the only top-ten L2 network to see its TVL grow in the past week, increasing by 1.42% to $7.24 billion, according to L2Beat.

Ethereum L2 Networks Maintain Profitability

Despite the decline in user activity, Ethereum Layer-2 networks continue to report significant profits. On-chain data from Growthepie indicates that most L2s have posted profits over the last six months, with only Polygon zkEVM and Taiko showing losses.

• Base: The most profitable, Base, generated $26.33 million in revenue, with $25.79 million in profits, achieving a 98% profit margin.
• Arbitrum One: Arbitrum One reported $10.35 million in profits.
• OP Mainnet: OP Mainnet earned $7.47 million in profits.
• Linea and Scroll: Linea and Scroll made $3.47 million and $6.09 million in profits, respectively.

These profits reflect only on-chain revenue and exclude off-chain operational costs such as server expenses and salaries. Despite this, the profit margins remain impressive, with Base leading at a 98% margin.