Layer 2 networks hit $13B TVL, but challenges still remain
Ethereum layer-2 networks reached a new milestone on Nov. 10, reaching $13 billion of total value locked (TVL) within their contracts, according to data from blockchain analytics platform L2Beat. According to industry experts, this trend of greater interest in layer 2s is likely to continue, although some challenges remain, especially in the realms of user experience and security.
According to L2Beat, 32 different networks qualify as an Ethereum layer 2, including Arbitrum One, Optimism, Base, Polygon zkEVM, Metis and others. Prior to June 15, all of these networks combined had less than $10 billion of cryptocurrency locked within their contracts, and their combined TVL had been declining since April’s high of $11.8 billion.
But beginning on June 15, layer-2 TVL growth turned positive. And by Oct. 31, these networks had reached a new high of nearly $12 billion combined TVL. From there, investment in layer 2 apps continued to climb, passing the $13 billion TVL mark on Nov. 10 and continuing to nearly $13.5 billion at the time of publication.
This rise in TVL is even more dramatic when compared with the rate that existed during the bull market of 2021, when overall crypto investment was much larger than it is today. On Nov. 12, 2021, when the market cap of all cryptocurrencies reached an all-time high of $2.82 trillion, layer 2s had less than $6 billion locked within their contracts. Today, the total market cap of cryptocurrencies is a more modest $1.4 trillion, according to CoinMarketCap, yet the TVL of layer 2s is greater than ever.
In a conversation with Cointelegraph, Metis CEO Elena Sinelnikova proposed a theory for why layer 2s are growing in spite of the continuing bear market. According to her, Ethereum’s high gas fees
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