A look at the current status of the four mainstream Layer2 solutions: Arbtrium occupies over half of the market share.

Original Author: OurNetwork

Translation: Felix, PANews

Currently, the Layer 2 market has entered a highly competitive stage. The author of this article analyzes the market performance of four mainstream Layer 2 solutions, namely Optimism, Arbitrum, Zora, and Public Goods Network, based on several data points including total transaction fees, number of addresses, Gas fees, and number of users.

Optimism: Total fees of Layer 2 network based on the OP Stack reach 4400 ETH, supporting Gas approximately 3.7 times that of Ethereum per second

In February 2023, Optimism announced the vision of the superchain, aiming to integrate originally isolated L2s into a single, interoperable and composable system. Today, Optimism is launching Ethereum L2 based on the OP Stack, including OP Mainnet, Base, Zora Network, and Public Goods Network. In August, the total transaction fees for these four chains were 4400 ETH, with a net revenue on-chain of 2200 ETH (fees minus L1 data costs).

The transaction fees of the OP Stack Chain are divided as follows:

• L1 fees: Data fees paid to L1 Ethereum. Profits become L2 revenue.

• L2 base fees: Gas used by L2, priced according to the EIP-1559 model. L2 revenue.

• L2 priority fees: Tip, L2 revenue

L1 fees have always been the main portion of user fees, but recently L2 fees have also taken up a certain share.

The vision of Superchain includes "making it easy to create horizontally scalable... web applications". In the past 30 days, these four chains have supported 4.6 million Gas per second, which is 3.7 times that of Ethereum L1, but the overall utilization rate is only 46%.

Take the transactions on Aerodrome on the Base network as an example to gain a deeper understanding of the cumulative transaction fees in the system. The transactions used:

• 3100 L1 Gas, paid at a price of 19 Gwei L1 Gas

• 178.8k L2 Gas, paid at a fee of 0.016 Gwei L2

• The user additionally paid a priority fee of 0.00000052 Gwei L2

Then, the transaction fees can be calculated as follows: (3.1k * 19) + (178.8k * 0.016) + (178.8k * 0.00000052) = 0.00005 ETH ($0.09). This fee accounts for 94.4% of the L1 fee, 5.6% of the L2 base fee, and nearly 0% of the L2 priority fee.

Arbitrum: Holds over 54% market share in Layer 2

Arbitrum is an Ethereum scaling solution with two chains: Arbitrum One (optimistic rollup) and Arbitrum Nova (a general-purpose AnyTrust solution). Both solutions run on the Nitro technology stack. Currently, Arbitrum One holds approximately 54.3% of the Layer 2 market share, leading in DEX trading volume and bridged ETH quantity. Nova has gained support from three new CEXs (Kraken, Bybit, Crypto.com), increasing the transaction count to around 6.6 million transactions per month (compared to approximately 800,000 transactions at the beginning of the year).

In addition, Arbitrum introduced Orbit in March, which allows developers to deploy customizable Layer 3 easily and permissionlessly, compatible with Arbitrum One or Nova. Xai Games recently deployed a testnet based on Orbit.

Since its launch in August 2021, Arbitrum One has maintained a healthy trading volume even during bear markets. Arbitrum One's 24-hour trading volume is $334 million, representing a 16% growth in the past 30 days.

Proof of Play has completely migrated its RPG "Pirate Nation" to Arbitrum Nova and observed a 20-fold reduction in gas costs. As part of the Pirate Nation UX, gas fees are borne by the users; Nova's efficiency helps the team profit from the secondary sales royalties after considering gas costs.

Related reading: Arbitrum vs. Optimism: A new round of red-blue battle, starting from Layer 3

Zora Network: Total transaction volume exceeds 7 million, number of creators exceeds 40,000 in a single month

Zora is a platform for creators and collectors to mint NFTs, with tens of thousands of creators and millions of collectors. Recently, it launched Layer 2 on the OP Stack. Among them, over 40,000 creators used Zora's network in August, with a month-on-month growth of 97.51% in the number of creators. In addition, since June, Zora's transaction volume has tripled, with a total of over 7 million transactions.

So far, Zora has bridged over 300,000 unique addresses to the Zora network. In the past two months (July to September), Zora's bridged wallets have grown nearly 7 times.

Finally, when examining the growth of the OP market share, it is evident that ZORA's share in total fees continues to steadily increase. Even with the introduction of Base and PGN, ZORA's proportion in the OP Stack Chains has now reached 10%, indicating a resonance among NFT collectors and creators caused by the shift to L2.

This transaction is used to deploy Open Threadition OE, a collaboration between Threadguy and Jack Butcher on Zora (July 16, 2023). Threadguy, a famous NFT KOL, expressed interest in changing his PFP and updating it to the Open version of his Mutant Ape. Jack Butcher subsequently launched a custom open version NFT called "Open Threadition" and donated all proceeds to Threadguy. Currently, the series has minted over 70,000 NFTs and generated 128 ETH in sales, with a total transaction fee of only 3 ETH. This was the largest L2 OE at the time and paved the way for other creators to release works beyond L1.

Public Goods Network: Approximately 13,000 accounts after the mainnet launched at the end of July, Zora and Gitcoin Grants Stack have been deployed

Public Goods Network (PGN) is a low-cost Layer 2 OP chain, a highly composable EVM compatible rollup that is nearly identical to the OP mainnet, built on the OP Stack. PGN mainnet launched on July 25. PGN has received support from Public Nouns, Clr.fund, Giveth, Hypercerts, Octant, Endaoment, Eco, Protocol Labs, and Gitcoin. PGN will collect the majority of sequencer fees generated by users on the network to fund public goods and projects. Since its launch, PGN has created 12,474 unique wallets.

GG 18, the second round on PGN, had a total of 11,955 independent donors, $12,390 in donations, and 67,700 donations. Gitcoin donations had a significant impact on transaction volume and demonstrated the potential for sustainable revenue in the future.

As of September 3rd, over 281 ETH has been bridged to PGN, with over 930 contracts deployed, including Zora, jokerace, Safe, and Gitcoin Grants Stack. Future Gitcoin rounds will also include bridging GTC (Gitcoin's token) and bridging stablecoins.

PGN Mints NFT is the first mint on Zora, check the transaction for details. It is one of the first use cases for PGN outside of grants. PGN will raise public goods resources by enabling users to transact on-chain, demonstrating PGN's commitment to deploying "fees for good" on PGN to create sustainable funding for public goods.