Renowned Ethereum Foundation contributor Josh Stark recently celebrated a significant milestone in the Ethereum-based ecosystem of second-layer networks. In 2021, Stark conducted a poll among his followers, revealing that 20% were skeptical about the possibility of a “flippening” occurring. Fast forward to the first days of 2024, and the aggregated total value locked (TVL) in Ethereum L2 protocols has exceeded that of all non-Ethereum blockchains, reaching a historic achievement.
As of January 4, 2024, Ethereum L2s contribute $20.7 billion in equivalent value, surpassing the $19.6 billion locked in non-Ethereum blockchains. Stark emphasized the importance of understanding that the metrics for second-layer networks include the sum of assets on L2, including native tokens, while metrics for L1s reflect assets locked in decentralized applications (dApps) on various blockchains.
Stark utilized L2Beat’s data to track second-layer blockchains and DefiLlama to analyze activities on non-Ethereum L1s. Notably, back in September 2021, Stark had polled his audience about the potential date of the “L2-over-L1” flippening. While the majority anticipated it happening in 2022, 20% believed it would never occur.
The growth of the L2 ecosystem has been remarkable, with its total value locked surpassing that of L1s by over 20 times since the initial voting. Even during the crypto winter, this gap expanded, reaching its peak during the Terra/Luna collapse in Q1, 2022.
According to L2Beat, the Ethereum L2s achieved an all-time high in TVL on January 2, 2024, surpassing $20.78 billion in equivalent—a remarkable 330% increase in just one year. The L2 landscape remains concentrated, with Arbitrum (ARB), OP Mainnet (Optimism, OP), Base, Metis Andromeda, and Manta Pacific collectively responsible for over 90% of the total value locked.
Arbitrum, as the largest Ethereum-based L1, is approaching the 50% dominance threshold once again, after a minor decline. At the time of reporting, it stands at the precipice, holding a significant share of the market. The closest competitor, OP Mainnet, maintains a 28.65% dominance, according to L2Beat.
