This bullish rally can be a paradigm shift in Ethereum's L1/L2 ecosystem. Analysts foresee that by the year of 2026, Ethereum's L2 rollups will generate the majority of fees. Here's how this major indicator increased in seven months in 2023.
Ethereum (ETH) fees "outperformed" Ether price; bullish sign?
In the last seven months, the cumulative volume of Ethereum (ETH) fees increased by 176%. Over a similar period, the price of the second largest cryptocurrency only grew by 53%. Last time this "imbalance" was registered in 2020 after two years of the Crypto Winter.
In 2023 #Ethereum fees have climbed 176% vs. the price, up 53%. The relationship between the two was instructive for the last bull market when fees outpaced price in 2020 after a two year decline. -@Jamie1Coutts pic.twitter.com/0oIF54OgOK— Chris Burniske (@cburniske) August 12, 2023
Cryptocurrency veteran and seasoned blockchain researcher Chris Burniske posted these observations commenting on a thesis by Bloomberg Intelligence's analyst Jamie Coutts. Burniske also admitted that the correlation between these two indicators was "instructive" in previous rallies.
At the same time, migration of users from Ethereum's L1 to various L2 ecosystems is a dominant process in the ecosystem that heavily affects the indicators of fees.
As covered by U.Today previously, the second largest Ethereum L2 Optimism (OP) surprisingly flipped Arbitrum (ARB), the #1 scaler, in a number of metrics thanks to the overhyped Worldcoin (WDC) token release.
Optimism (OP) exceeded Arbitrum (ARB) in the daily transactions volume and almost managed to eclipse it in the number of active wallets.
L2s on fire in 2023, but we are still early
However, by printing time, Arbitrum's (ARB) TVL is more than twice as high as that of Optimism (OP). Arbitrum's DeFi protocols total $5.94 billion in locked assets, while Optimism-based protocols only logged $2.82 billion.
Things have only just started for L2s though. In seven months only, their share in Ethereum (ETH) ecosystem fees increased by more than 3x and almost reached 14%. The number of active addresses across L2s exceeded 900,000, Coutts' report says.
Should L2 adoption keep this pace, major scaling solutions like Arbitrum (ARB), Optimism (OP) and zkSync will be responsible for 20% of Ethereum (ETH) fees by the end of 2023.
In three years, they will surpass L1's numbers, analysts conclude.