Ethereum (ETH) has been grappling with scalability limitations for years. High transaction fees and network deficiencies often hindered innovation and widespread adoption. For instance, as of May 2022, the average transaction fee on the Layer 1 (L1) network was $196, significantly higher than the $2 average two years prior.
Airdrop Activities’ Impact
The increase in costs significantly impacted the user experience on Ethereum, making it more expensive and resulting in slower transaction processing speeds compared to networks like Solana (SOL). To overcome these challenges, Layer 2 solutions (L2) emerged, offering a system where transactions are processed and combined separately before a compressed version is sent to the Ethereum mainnet for payment. Consequently, 2023 began with a significant increase in demand for L2 scaling solutions.
In February, these protocols spent 106.56 billion GWEI to balance the activity on the Ethereum base layer. By the end of March, this figure more than doubled to 253.91 billion GWEI. The sudden increase in L2 activity in March was associated with the anticipation of Arbitrum’s ARB token airdrop, which occurred later that month. The ecosystem saw a rapid increase in L2 activity as new participants completed on-chain transactions to qualify for the ARB token airdrop.
L2’s Daily Transaction Peak
On March 23, Arbitrum completed the airdrop, distributing 1.27 billion ARB tokens to over 600,000 eligible wallets. According to Arbiscan, the number of daily transactions on L2 reached 2.73 million that day, marking the highest single-day level of daily transactions for the year. While many cryptocurrency prices saw significant declines in the first half of the year, gas fees in the L2 sector continued to rise.
Data from Dune Analytics shows that the monthly gas fee spent to complete L2 activity on the Ethereum mainnet between March and September increased by 108%, reaching 527 billion GWEI. Although this amount showed a decrease for the remainder of the year, the high monthly gas fees indicated that L2 platforms recorded historic highs in user activity in 2023.
The launch of Coinbase’s Ethereum-based scaling solution, Base, in August brought a new group of users to the L2 ecosystem. Less than a month after Base’s launch, network user activity surpassed existing protocols like Arbitrum and Optimism (OP). Data obtained from IntoTheBlock revealed that during this period, the L2 network recorded an average of 888,000 daily active addresses, accounting for 60% of all on-chain addresses connected to optimistic rollup services within the same window.
