Ethereum
Ethereum Fees Hit All-Time Low as L2 Grabs User Attention: IntoTheBlock — TradingView News
Ethereum transaction fees have reached a six-month low, driven by transactions moving to layer 2 (L2) blockchains, according to the latest edition of IntoTheBlock’s “On-chain Insights” newsletter.
This migration contributed to a decrease in the total fees accumulated by Ethereum. In April, transactions on the three largest L2s, Arbitrum, Optimism and Base, accounted for an unprecedented 82% of all Ethereum transactions.
With the inclusion of additional L2s, this percentage is likely even higher. The launch of EIP-4844 on March 13 played a crucial role in this transition by reducing L2 fees by more than ten times, leading to a 10% drop in mainnet transactions and a shift in the economics of Ethereum tokens.
In the competitive L2 landscape, different platforms are carving out their place. Institutions showed a preference for Arbitrum, which dominated 73% of Ethereum’s trading volume among major L2s. Conversely, Arbitrum accounted for only 39% of the number of transactions, while Base captured 50%. Notably, Blackrock and Securitize recently applied to list real-world asset fund BUIDL on Arbitrum.
On the retail side, Optimism’s OP Stack has gained traction with “SocialFi” apps. Coinbase’s L2 Base saw a surge in transactions following the FriendTech airdrop, and social media-based card game Fantasy.top generated $6 million in fees this week on the L2 Blast. This diversification of applications has intensified competition between L2s, particularly in terms of market capitalization.
Optimism’s OP token saw a 48% increase from its April low, outperforming ARB’s 22% gain. The OP token now surpasses ARB in terms of circulating market capitalization and fully diluted valuation. Additionally, venture capital firm a16z’s $90 million investment in OP boosted the project’s resources and credibility.
Continued competition between L2s results in lower fees for Ethereum in the short term. However, this simultaneously fosters a rich ecosystem of applications that promise to drive economic activity and deliver long-term benefits, IntoTheBlock concludes.