Ethereum’s L1 struggles pave the way for L2s to shine
- Base’s “on-chain summer”, alongside rising attention toward Optimism, caused a dip in ETH burned.
- Projects in the development stage including zkSync and StarkNet also contributed to the decrease.
The inability of Ethereum’s [ETH] Layer One (L1) to scale efficiently has caused the number of ETH burned since 2023 to reach a new low. According to on-chain data from The Block, the number of ETH burned after EIP-1559 dropped to 504.54 ETH on 12 August.
Realistic or not, here’s OP’s market cap in ETH terms
The blockchain began the ETH burning mechanism after the London hard fork with the aim of simplifying the transaction fee process. So, when a transaction takes place on the Ethereum Maiinet, it’s split into two. This creates a base fee that gets burned and a priority assigned to the miners.
A change in attention
Therefore, the decline in ETH burned could be attributed to the waning activity on Ethereum L1. And this was because market participants have shifted their attention to L2s which offered more scalability.
Of late, the crypto community has been agog with the launch of Base, Coinbase’s L2. And since its launch, $203.88 million has been bridged to Base, with ETH accounting for $144.54 million out of the total.
Despite the increased activity on Base, it has not yet matched up to other L2s including Polygon [MATIC] and Optimism [OP] in terms of active addresses. Active addresses are the number of distinct addresses that participated in the given transfer of an asset.
At press time, both Optimism and Polygon registered declines in the metric over the last seven days. However, Optimism was the dominant one as the metric stayed put at 69,400. Network activity on Polygon was relatively underwhelming with the active addresses at 9,101.
Participants eye new launches
Two other L2s that seem to have shifted the attention from the Ethereum Mainnet are zkSync and StarkNet. StarkNet is a permissionless decentralized Zero Knowledge (ZK) rollup aimed at scaling decentralized Applications (dApps) on the Ethereum blockchain.
zkSync, on the other hand, also uses ZK technology to enable faster and cheaper transactions on Ethereum. But why have these two projects, which are still in the development stage, been getting a lot of hype?
Although unconfirmed, the broader crypto community feels that both projects would incentivize their early users when they officially launch. As a result, StarkNet and zkSync were recording an influx of active users on their respective Testnets.
How much are 1,10,100 ETHs worth today?
At the time of writing, Token Terminal showed that StarkNet’s active users have grown by 3524% in the last 180 days.
For zkSync, its Total Value Locked (TVL) has grown incredibly. And at press time, the TVL was $142.68 million. The TVL state, at the time of writing, implies that deposits into dApps under the protocol have been impressive.