Ethereum layer-twos reportedly processing more transactions than BTC
Layer-two scaling protocols for Ethereum have surged in adoption in recent months as gas prices climb again, and the L2 ecosystem is now processing more daily transactions than the Bitcoin network according to recent findings.
According to CoinMetrics data collated by industry analyst and Week In Ethereum News founder Evan Van Ness, there were more transactions on Ethereum layer-two than on the Bitcoin network on Sept. 6. Layer-two protocols processed around 250,000 transactions for the day whereas there were around 210,000 on BTC.
Fun fact:
There are already more daily transactions on Ethereum’s layer2 (~250k) than on Bitcoin (~210k yesterday per @coinmetrics) $ETH layer2 is just getting started
— Evan Van Ness (@evan_van_ness) September 6, 2021
The analyst revealed that StarkWare processed the most for the period with around 143,000 transactions across a number of DeFi platforms such as the dYdX exchange, and the L2 NFT platform Immutable X.
Arbitrum, which launched to mainnet on Sept. 1, had around 56,000 transactions. Its newly launched Arbitrum One platform is already attracting big names in DeFi including Aave, Chainlink, and Uniswap which is exploring several layer two options.
Optimistic Ethereum had around 28,000 transactions for the day according to the researcher. Uniswap deployed its v3 protocol on Optimism in July, it also powers a L2 version of the Synthetix/Kwenta DeFi trading platform.
Van Ness reported that there were a few others th comprising the rest with decentralized exchange Loopring taking the lion’s share.
Bitcoiners pointed out that Van Ness has made a comparison of ETH layer-twos with BTC’s layer-one and provided no information on Bitcoin’s layer-two Lightning Network. Van Ness responded that, “my impression, given the low amount locked, is that Lightning has very little traction but I’m happy if someone shows me data to the contrary.”
Related: Solution to scale Ethereum ‘100X’ is imminent and will get us through until Eth2: Vitalik
Strategy lead at Ethereum layer-two technology aggregator Polygon, “Sanket”, broke down some of the statistics for the network revealing that smaller transactions were dominant. In a tweet on Sept. 7, he stated “45% of all addresses, across all of their transactions that day, were less than $1.45.”
According to L2fees, Loopring remains the most cost-effective platform for transferring Ethereum costing just $0.40 at the time of writing. Matter Labs’ zkSync was around double the cost at $0.83 while Arbitrum One cost $2.75, and Optimism was $5.83 to send ETH on their respective platforms.
Ethereum itself costs almost $11 for a simple ETH transfer, however, Bitinfocharts reported the average gas cost for all transaction types at around $40 yesterday.
Why bitcoin, ethereum prices are climbing higher
Major crypto tokens are trading at their highest level since May. Bitcoin was changing hands at more than $50,000 on Sept. 4, an increase of 20% from a month ago, according to CoinDesk data. Ethereum has risen around 40% to more than $3,900 during that span.
The hard part is explaining why prices are so high. Crypto assets tend to be highly volatile, with prices that pingpong around on the latest speculation. Here are some developments that may have given the popular digital tokens a recent boost.
Facebook could add features for NFTs to its wallet
Facebook executive David Marcus told Bloomberg in late August that the social network could provide support for non-fungible tokens on its digital wallet, known as Novi. (Facebook is also developing its own crypto asset, known as Diem.) NFTs are kind of a digital version of one-of-a-kind artworks or trading cards typically built on the ethereum blockchain. If Facebook helps make NFTs more popular, that could drive up demand for ether, which is used to pay for computations on the ethereum network. Visa also says it’s exploring NFTs.
El Salvador will make bitcoin legal tender on Sept. 7
The Central American nation will become the first country in the world to make the original crypto asset a national currency (alongside the US dollar). Some think this will spur further bitcoin adoption. The International Monetary Fund, on the other hand, thinks this type of thing could destabilize the economy and expose the government and regular citizens to additional exchange-rate risk.
Bitcoin mining is bouncing back
Crypto miners, who power fleets of energy-intensive computers to process bitcoin transactions, are powering back up after getting banned in China. As the backbone for crypto computing capacity rebounds and is redistributed around the world, from Texas to Kazakhstan, some may see this as a sign of robustness for bitcoin and the broader world of digital assets.
Elon Musk still likes crypto
Sometimes it seems like bitcoin is worth whatever Tesla founder Elon Musk says it is. Crypto hit the skids in May when Musk said the electric car company would stop accepting bitcoin as payment until it is produced using more sustainable sources of energy. Lately he’s made nice noises about crypto, though, and he pointed out on Twitter that he owns bitcoin and some other digital assets and would like for them to flourish.
Not all the news is necessarily bullish. An item for the bears includes:
The head of the US Securities and Exchange Commission fired a warning shot
Gary Gensler told the Financial Times that crypto executives have to heed regulations if they want to be around in the coming years. He also suggested that so-called DeFi, or decentralized finance based on software that allows users to transact directly with each other, is still rather centralized, and perhaps not that different from the peer-to-peer platforms that sprung up years go. Last month, the SEC brought charges against two men who sold $30 million of securities using DeFi technology.
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