“L2-over-L1” flip: Ethereum layer 2 TVL reaches historical milestone

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Ethereum Foundation contributor Josh Stark sees significant achievements for the Ethereum-based layer 2 network ecosystem. By 2021, 20% of his followers were convinced that this “flip” would never happen.

Ethereum L2 reaches historic milestone

In early 2024, the total value locked in Ethereum-based L2 protocols exceeded the total value of all non-Ethereum blockchains.

As Stark pointed out on January 4, 2024, while Ethereum L2 has a locked value of $20.7 billion, the remaining blockchains have accumulated $19.6 billion.

It happened 🎉

– Ethereum L2 = $20.7 billion
– Other L1 = USD 19.67 billionhttps://t.co/o38jqwnHJC pic.twitter.com/uqWAqWkJUC

— Josh Stark (@0xstark) January 4, 2024

At the same time, he emphasized that these metrics cannot be considered identical: for layer 2 networks, the metric refers to the total assets on L2, including native tokens. For L1, this metric reflects the total assets locked in dApps on this or that blockchain.

Analysts use L2Beat data to monitor layer 2 blockchains and DefiLlama to analyze what is happening on non-Ethereum L1.

Interestingly, in September 2021, he asked fans about the date of this “L2-over-L1” flip event. While the majority of his followers are convinced that this could happen in 2022, 20% responded that it would never happen.

As of the first day of voting, the L2 ecosystem is 20 times smaller than the L1 ecosystem. During the crypto winter, this gap became even more severe. Its peak was reached in Q1 2022 with the Terra/Luna collapse.

As shown by L2Beat, Ethereum’s L2 ecosystem reached its highest TVL ever on January 2, 2024. This figure grew to more than $20.78 billion, an increase of more than 330% in just one year.

The L2 landscape remains very “concentrated”: just five networks – Arbitrum (ARB), OP Mainnet (Optimism, OP), Base, Metis Andromeda and Manta Pacific – account for more than 90% of its TVL.

Arbitrum (ARB), the largest Ethereum-based L2, is rebuilding its dominance after a slight decline. As of this writing, the network is just one step away from reaching the 50% goal.

L2Beat data shows that in terms of the closest competitor, the OP mainnet only accounts for 28.65%.