Layer2 Track Data Scan: Multi-Angle Analysis of the Development Status of Four Major Smart Contract Platforms | CatcherVC Research

Author: Web3er Liu, CatcherVC

If the financial market is the iterative history of human behavior patterns, then the Internet and Web3 are the chronicle of system expansion and security optimization. From the ARPANET, the ancestor of the Internet, which was put into operation in 1969, to the Ethereum system that became congested due to the NFT craze in 2021, the evolution of distributed networks has always revolved around the two core aspects of speed and security. Today, the entire Layer 2 and new public chain track has almost completely become a technological narrative about transaction fees.

Since the beginning of 2021, with the explosive development of the entire Crypto world, the number of transactions on the Ethereum chain has consistently remained above 1 million within a 24-hour period, with average fees once soaring to 50 dollars. During the peak period of the "5.19" incident and the NFT buying frenzy last year, the transaction fees for a single transaction even reached hundreds of dollars, with the nearly exaggerated transaction costs directly shutting countless users out.

(Image source: The Block)

(Image source: Etherscan)

In response to the persistently high transaction fees, Su Zhu, founder of Three Arrows Capital, bluntly stated: "Ethereum has abandoned its users, and newcomers can no longer afford this public chain," while the entire blockchain industry has engaged in a fierce debate over this congested "noble chain."

Related Reading: 《The Most Intense Debate of the Year: The Public Chain Pattern Controversy Triggered by the Founder of Three Arrows Capital》

Just like the Christian world in the 16th century, KOLs have clearly divided into two key factions: supporters of "new public chains" and "ETH 2.0 and Layer 2." While new public chains like Solana and Avalanche have reached new heights due to the "public chain competition," several Layer 2 networks are gearing up. With Arbitrum, Optimism, and zkSync launching one after another last year, the Layer 2 ecosystem has gradually entered a fast development lane, with the total locked value (TVL) of Layer 2 increasing by over 600% in the past six months, now reaching 6 billion dollars. According to estimates from multiple data sources such as ETHTPS.info, on March 15, the Layer 2 network processed approximately 150,000 transactions, while the ETH mainnet handled 1.2 million transactions, with the total number of transactions on Layer 2 exceeding 12% of the ETH mainnet.

From the perspectives of TVL scale, development momentum, and VC background, Arbitrum, Optimism, Metis, and zkSync are currently the four most competitive smart contract platforms in the Layer 2 network.

(Total locked value of Layer 2, Image source: L2BEAT)

(Comparison of ETH mainnet and Layer 2 network TPS, Image source: ETHTPS.info)

Considering that the user scale of the entire Layer 2 is far lower than that of the Ethereum mainnet, and that some indicators of the Layer 2 network are currently difficult to query, CatcherVC uses "daily transaction count / unique address count" (average daily transactions per user) and "TVL / unique address count" (average locked value per user) to simply measure network activity. By organizing data provided by Dune Analytics, L2Beat, and L2Fees, CatcherVC has produced the following chart:

(This chart only captures data from March 15, Image source: CatcherVC)

It is not difficult to see that the activity level of Layer 2 networks represented by Optimism and Arbitrum, Metis, etc., is far higher than that of the ETH mainnet. However, the Layer 2 ecosystem is still in its early stages, with a small user base, and most networks' TPS is less than 5% of Ethereum's, indicating that there is significant room for improvement in network utilization, with broad potential for future growth.

Taking Optimism, which completed a $150 million financing on March 17, as an example, the network's average daily TPS is around 0.35, only 2.5% of Ethereum's. In the past week, the net inflow of funds was approximately $12 million, with a total on-chain asset scale of about $630 million, and a TVL exceeding $450 million, ranking 4th overall among Layer 2 networks. Currently, the update frequency of the Optimism codebase is stable at over 30 times per week, with the daily addition of contracts generally exceeding 40. The main protocols included by DefiLlama (including Uniswap, Curve, and Synthetix) have reached 25, showing a robust growth trend.

(Image source: Dune Analytics)

If we compare the "daily transaction count" and "daily active address count," we find that the average daily active user on the Ethereum mainnet conducts about 2 transactions, while the average daily active user on Optimism conducts 12 to 16 transactions, making the transaction frequency of the latter about 6 to 8 times that of the former. Considering that the transaction costs on Optimism can be shared among active users during the same period, as the user base grows in the future, the network utilization of Optimism can continue to rise, and transaction fees may further decrease, potentially leading to even higher transaction frequencies for active users, which is crucial for user retention.

(Image source: Dune Analytics)

(Image source: Etherscan)

Beyond Optimism, other Layer 2 star projects, such as Metis, show even greater potential. This project adopts a structure similar to Optimism and also employs the model of "Layer 2 executing transactions, Layer 1 storing transactions, and validators being able to challenge," essentially being a branch of the Optimistic Rollup series, having previously raised only $8 million.

According to data, Metis has seen a net inflow of approximately $200 million in the past week, with a TVL exceeding $740 million, ranking 3rd overall among Layer 2 networks. Currently, there are 16 protocols included by DefiLlama on Metis (including NetSwap, etc.), and the network's average daily TPS is only about 0.25, less than 2% of Ethereum's, indicating that its network utilization has even greater growth potential than Optimism.

(Image source: L2BEAT)

At the same time, Metis demonstrates strong DeFi activity. According to statistics from DEX SCREENER, the daily trading volume of DEX in the Metis ecosystem can reach $30 million, basically achieving 70% to 80% of that of Arbitrum and Optimism, with the Hermes protocol accounting for the largest share of DEX trading volume on Metis. Considering that the most mainstream DeFi protocols, such as Uniswap and Curve, have not yet launched on Metis, and that the number of users on this network is far less than that of Arbitrum and Optimism (only 20% of Optimism), the growth potential of Metis's DeFi market is significantly larger than that of Optimism and Arbitrum. Additionally, Metis has officially announced that it will soon launch NFT cross-chain bridges and IPFS local storage features.

(Image source: DEX SCREENER)

Compared to the recently spotlighted Optimism and the promising Metis, Arbitrum, which completed a $120 million Series B financing last year, possesses a larger capital base and a more diverse ecosystem. Currently, Arbitrum's TVL exceeds $3 billion, accounting for over 50% of the Layer 2 network's TVL. At the same time, Arbitrum's average daily TPS is 0.7, close to 5% of Ethereum's, and there are 66 protocols included by DefiLlama in its ecosystem, including major DeFi protocols such as Uniswap, SushiSwap, Curve, Beefy, and Yearn, all deployed on this network.

(Image source: The Block)

(Image source: Nansen)

In terms of net fund inflow, Arbitrum's status is not optimistic. According to data, in the past week, the Arbitrum network experienced a net outflow of approximately $57 million. Earlier this year in January and last September, Arbitrum had two outages due to the failure of the single Sequencer node it employed, which raised doubts about its performance. In response, the founder of Arbitrum stated that they will introduce a decentralized form with multiple Sequencer nodes in the future.

Recently, Arbitrum also announced plans for the sidechain AnyTrust, which essentially benchmarks its performance and fees against sidechains like Polygon. This sidechain will upload the root hash of each block's state tree to Ethereum Layer 1 and switch to Rollup mode when its own node performance is poor. AnyTrust is expected to operate alongside the Arbitrum network in the future, aiming to achieve performance and cost levels close to Polygon.

(TVL of Optimistic Rollup series far exceeds ZK Rollup, Image source: Footprint Analytics)

Compared to typical Optimistic Rollup projects like Optimism, Metis, and Arbitrum, another star project in Layer 2, ZKSync, is still lagging in the ZK Rollup track. Due to the complexity of the theoretical aspects of zero-knowledge proof technology and the high development difficulty, ZK projects have made slow progress in EVM compatibility. Compared to Optimism and other OP Rollups that have already achieved EVM compatibility, ZKSync, which completed a $50 million Series B financing led by a16z last November, has not performed well in terms of ecosystem development, TVL, transaction count, and user activity.

According to relevant data, ZkSync's TVL currently exceeds $130 million, with a net inflow of approximately $23 million in the past week. Currently, ZKSync's average daily TPS is about 0.2, and only one protocol, ZigZag, is included by Defi Llama in its ecosystem. According to its official website, there are currently 10 protocols launched on ZKSync.

(Image source: L2BEAT)

Although ZKSync's current data may not be as impressive as that of strong OP Rollups like Metis, its EVM-compatible ZK EVM testnet was launched in late February and is generally viewed positively by KOLs in the industry. Since ZK Rollup can achieve higher TPS than OP Rollup and has excellent security, with the official launch of ZK EVM in the future, ZKSync will have the opportunity to reshape the Layer 2 landscape.

Overall, the current Layer 2 track is still in a relatively primitive early stage. Compared to the public chain and DeFi tracks that have long entered the vortex of competition, various Layer 2 projects clearly have immense growth potential. With ETH 2.0 officially progressing, Layer 2, which is on the "eve of explosion," may accelerate its development with the support of leading VCs, defining a new order for the entire crypto industry.