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Analysis
TABLE OF CONTENTS

Largest Layer-2 Solutions

4.5
| by
Nicholas Boey
-

What is the Largest Layer-2 (L2) Solution?

Arbitrum (ARB) is the largest L2 solution, with $1.79 billion in total value locked (TVL) in October 2023. It reached its yearly peak TVL of $2.60 billion in May 2023, following the airdrop of its ARB token in March 2023.

Polygon (POL) is the second largest L2 solution, accumulating $0.78 billion in TVL in October 2023. It reached its yearly peak TVL of $1.18 billion in February 2023, following its V0.3.1 Hardfork upgrade in January 2023. This reduced gas spikes and addressed chain reorganizations for the chain.

Optimism (OP) follows closely as the third largest L2 solution, with $0.64 billion in TVL in October 2023. It reached its yearly peak TVL of $0.99 billion in March 2023.

ARB, POL, and OP combined make up 73.8% of the total TVL of the top 10 L2 solutions. However, this is a slight decrease from their yearly peak of 86.9% in March 2023. This can be attributed to the launch of new Layer-2s such as Base, zkSync Era, Mantle, ApeX Protocol, StarkNet, and Linea, which managed to capture market share from the top 3.

Top 10 Layer-2 Solutions Market Share

Total TVL across the top 10 L2 Solutions reached a yearly peak of $5.3 billion in May 2023, but has since decreased to $4.3 billion in October 2023. However, this still represents a 45% increase from January 1, 2023, when TVL totaled $3.0 billion.

Arbitrum Is The Largest Layer-2 Solution

Arbitrum is the largest L2 solution, capturing 41.2% or $1.8 billion TVL of the top 10 L2 solution market share in October 2023. Despite reaching its yearly peak TVL in May 2023, its market share peaked in March 2023, capturing 47.2% or $2.3 billion TVL.

The ARB token airdrop in March was a major catalyst in increasing its market share, stirring the L2 narrative where many traders and investors alike bridged liquidity over to the chain.

Newcomers Account for 11.0% In Market Share

Base, zkSync, and Mantle now account for 11.0% of the top 10 market share in October 2023. All three of these Layer-2 solutions were launched this year, with zkSync Era launching in March 2023, and Base and Mantle launching in July 2023.

Base is the fastest-growing L2 solution, capturing 7.2% or $0.3 billion TVL in October 2023. Having launched in July 2023, it has already grown to join the rankings of the top 5 L2 solutions.The success of Base can be traced to its backing by Coinbase, and the rise of social-fi applications like Friend.Tech, which managed to attract users to flock to the chain.

zkSync Era comes in second, capturing 2.8% or $0.1 billion TVL in October 2023. Launched in March 2023, it has grown to become the seventh largest L2 solution. Due to zkSync’s success in raising funds, it has attracted many airdrop farmers to bridge liquidity to the chain in hopes of obtaining an airdrop.

Mantle is the third newcomer to make it to the top 10 L2 solution, capturing 1.1% or $48.0 million. Previously known as BitDAO, it relaunched in July 2023, and now boasts one of the largest treasuries in the crypto space.

Gnosis Doubles in TVL

In October 2023, Gnosis more than doubled (2.47x) its TVL, reaching $160.1 million with a 3.7% market share, up from $64.9 million (1.8%) in January 2023.

This growth is due to Gnosis Chain supporting sDAI, an interest-bearing form of DAI, MakerDAO’s widely-held US dollar-pegged stablecoin. sDAI represents a liquid token that a user has staked in the DAI Savings Rate (DSR) on the Spark Protocol. Asset tokenization is set to become a major segment within Gnosis, with Gnosis Chain bridge being the third largest sDAI holder.

Top 10 Layer-2 Solutions

The top 10 Layer-2 solutions by TVL in October 2023 are:

Rank  Layer-2 Solutions TVL ($)
1 Arbitrum 1,793,193,566
2 Polygon 775,413,271
3 Optimism 639,501,688
4 dYdX 356,363,610
5 Base 310,963,196
6 Gnosis 160,136,287
7 zkSync Era 120,064,225
8 Loopring 83,905,409
9 Ronin 59,813,934
10 Mantle 48,209,047

 

Methodology

The study examined Layer-2 Solutions by their total value locked (TVL) from January 2023 to October 24, 2023. This TVL excludes liquid staking and all double-counted TVL of a chain. Data was obtained from DefiLlama. The top 10 Layer-2 solutions are Arbitrum, Polygon, Optimism, dYdX, Base, Gnosis, zkSync Era, Loopring, Ronin and Mantle. The Layer-2 solutions that were launched this year are zkSync Era, Base and Mantle.


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Curious to find out more about our previous research studies & statistics? Check out this one we did on the top Bitcoin Mining companies, by Bitcoins owned.
 
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Nicholas Boey
Nicholas Boey
Nicholas is a Market Research Intern at CoinGecko. He can be seen crawling around the vast crypto space, be it NFTs, crypto or memecoins from time to time. People in web3 call him picnicmou. Follow the author on Twitter @picnicmou

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