Ethereum fees hit lows while L2 capture users’ attention: IntoTheBlock

Ethereum’s
transaction
fees
have
reached
a
six-month
low,
caused
by
the
shift
of
transactions
to
layer-2
(L2)
blockchains,
according
to
the
latest
edition
of
IntoTheBlock’s
“On-chain
Insights”
newsletter.

This
migration
has
contributed
to
a
decrease
in
the
total
fees
accrued
by
Ethereum.
In
April,
transactions
on
the
largest
three
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
slashing
L2
fees
by
more
than
tenfold,
leading
to
a
10%
drop
in
mainnet
transactions
and
a
shift
in
Ethereum’s
token
economics.

In
the
competitive
landscape
of
L2s,
different
platforms
are
carving
out
their
niches.
Institutions
have
shown
a
preference
for
Arbitrum,
which
dominated
73%
of
Ethereum’s
transaction
volume
among
the
top
L2s.
Conversely,
Arbitrum
accounted
for
only
39%
of
the
number
of
transactions,
while
Base
captured
a
50%
share.
Notably,
Blackrock
and
Securitize
have
recently
applied
to
introduce
the
BUIDL
real-world
assets
fund
on
Arbitrum.

On
the
retail
side,
Optimism’s
OP
Stack
has
been
gaining
traction
through
“SocialFi”
applications.
Coinbase’s
Base
L2
experienced
a
surge
in
transactions
following
FriendTech’s
airdrop,
and
the
social
media-based
card
game
Fantasy.top
generated
$6
million
in
fees
this
week
on
the
Blast
L2.
This
diversification
of
applications
has
intensified
the
competition
among
L2s,
particularly
in
terms
of
market
capitalization.

Optimism’s
OP
token
has
seen
a
48%
increase
from
its
April
lows,
outperforming
ARB’s
22%
gain.
The
OP
token
now
surpasses
ARB
in
both
circulating
market
cap
and
fully
diluted
valuation.
Additionally,
venture
capital
firm
a16z’s
$90
million
investment
in
OP
has
bolstered
the
project’s
resources
and
credibility.

The
ongoing
competition
among
L2s
is
leading
to
lower
fees
for
Ethereum
in
the
short
term.
However,
it
is
simultaneously
fostering
a
rich
ecosystem
of
applications
that
promise
to
stimulate
economic
activity
and
offer
long-term
benefits,
concludes
IntoTheBlock.