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Ethereum Layer 2 Networks Grow Fast in Q1 2024

By MaisDica

Ethereum Layer 2s Expand Rapidly

As of March 2024, Ethereum’s Layer 2 (L2) ecosystem is undergoing one of the most significant surges in adoption, developer activity, and capital inflows in its history. Designed to solve Ethereum’s scalability challenges, these networks — including Arbitrum, Optimism, Base, zkSync Era, and Starknet — are no longer experimental add-ons. They are now essential components of the Ethereum stack.

Driven by a combination of airdrop incentives, ecosystem funding, and lower transaction costs, Ethereum Layer 2s are experiencing rapid expansion in transaction volume, user count, and total value locked (TVL). In many ways, Layer 2 is no longer the future — it’s the present.

What Are Ethereum Layer 2s?

Layer 2 solutions are separate blockchains built atop Ethereum that rely on Ethereum for security and settlement. They bundle or process transactions off-chain, then submit a summary or proof to Ethereum’s base layer.

There are two main L2 technologies:

  • Optimistic rollups: Assume transactions are valid unless proven otherwise. Used by Arbitrum, Optimism, Base.

  • ZK rollups: Use zero-knowledge proofs to verify transactions. Used by zkSync, Starknet, Scroll.

These rollups offer:

  • Significantly lower gas fees

  • Faster transaction finality

  • Greater throughput, enabling dApps to scale

This infrastructure unlocks use cases that were previously cost-prohibitive on Ethereum mainnet.

Q1 2024: Growth by the Numbers

Ethereum Layer 2s are showing explosive growth across all major indicators:

  • TVL across all L2s: Surpassed $24 billion, doubling from Q3 2023.

  • Arbitrum: Leads the pack with over $10 billion TVL and robust DeFi activity.

  • Optimism: Holds $5.2 billion, aided by the rise of the “Superchain” model.

  • Base, Coinbase’s L2: Surpassed $3.8 billion and has become a hub for new developers.

  • zkSync and Starknet: Showing strong growth ahead of expected token launches.

In February 2024 alone, over 3.2 million unique addresses interacted with Layer 2 networks, and daily L2 transactions often exceeded mainnet Ethereum by volume.

Key Drivers of Layer 2 Expansion

1. Lower Fees and Speed

Layer 2s significantly reduce the cost of interacting with Ethereum-based applications. On most L2s:

  • Swaps cost less than $0.10

  • NFT minting can be done for pennies

  • Bridge and staking functions are near-instant

This fee reduction is not only attracting crypto-native users but also mainstream developers and startups, who now find it feasible to build user-friendly, scalable products on Ethereum.

2. Airdrops and Token Incentives

Speculation around airdrops has become a major on-ramp for user activity. Notable examples include:

  • Starknet’s STRK airdrop in February 2024, which rewarded over 1 million wallets.

  • zkSync and Scroll are widely expected to launch native tokens soon.

  • Base and Linea have hinted at long-term user reward programs.

While some of this activity is “airdrop farming,” it also leads to sticky adoption, with users experimenting across ecosystems.

3. Ecosystem Grants and Funding

L2 networks are aggressively funding projects to grow their ecosystems:

  • Arbitrum’s STIP (Short-Term Incentives Program) allocated over $100M to dApps.

  • Optimism’s RetroPGF distributed millions to public goods and open-source projects.

  • Base is closely integrated with Coinbase, supporting developers with fiat ramps, wallets, and visibility.

These programs are not only growing TVL, but also attracting long-term builders who align with Ethereum’s modular vision.

4. Developer Tooling and Infrastructure

Layer 2s have invested heavily in making it easier to build:

  • Optimism’s OP Stack is becoming the foundation for new rollups (e.g., Base, Mode).

  • Arbitrum Orbit allows developers to spin up custom chains using Arbitrum’s tech.

  • zkSync’s zkEVM and Starknet’s Cairo language offer zero-knowledge security and performance.

The result is a developer landscape that is increasingly modular, fast-moving, and competitive.

Leading Ethereum Layer 2 Networks

Arbitrum (ARB)

  • The most active Layer 2 by TVL and number of contracts deployed.

  • Major DeFi protocols like GMX, Radiant, and Camelot are native to Arbitrum.

  • Orbit is enabling “Layer 3” custom chains for advanced use cases.

Optimism (OP)

  • Focused on building the “Superchain” — a network of interoperable chains using the OP Stack.

  • Partners include Coinbase (Base), Worldcoin, and Mode.

  • Governance through the Optimism Collective rewards public goods and ecosystem builders.

Base

  • Developed by Coinbase and launched in August 2023.

  • Integrates tightly with Coinbase wallets, fiat onramps, and regulatory frameworks.

  • Has quickly become one of the most used chains for NFTs and DeFi.

zkSync Era

  • The first live zkEVM, enabling Ethereum-compatible smart contracts with ZK security.

  • Users anticipate an airdrop of the ZKS token.

  • Its developer-first approach is gaining traction across gaming and NFT projects.

Starknet

  • Based on STARK cryptography, uses Cairo for smart contracts.

  • STRK token launched in Q1 2024.

  • Focuses on scalable dApps with large compute requirements.

Real Use Cases Gaining Traction

Beyond speculation and DeFi, Layer 2s are supporting a growing number of applications:

  • Gaming: Onchain games are launching natively on Starknet, Base, and Arbitrum Nova.

  • Social apps: Farcaster and Lens are exploring Layer 2 solutions for scalable, censorship-resistant networks.

  • Tokenized assets: Institutions are experimenting with RWAs on L2s due to lower fees and regulatory compliance options.

This variety of use cases points to a more mature ecosystem, moving beyond simple financial primitives.

Challenges Facing Layer 2s

Despite rapid growth, several challenges remain:

  1. Liquidity fragmentation: Assets and users are spread across many rollups, leading to inefficiencies.

  2. Poor UX around bridging: Moving funds between L2s remains clunky for average users.

  3. Centralized sequencers: Most L2s still rely on single entities to order transactions.

  4. Regulatory uncertainty: As L2s grow, questions arise about compliance, especially with financial apps.

Ethereum’s 2024 roadmap aims to address some of these, especially with EIP-4844 (proto-danksharding), which will lower L2 fees and improve interoperability.

Ethereum’s Modular Future

The rise of Layer 2s is transforming Ethereum’s architecture:

  • Execution is migrating off-chain.

  • Settlement and security remain on Ethereum mainnet.

  • L3s and app-specific chains are being built atop Layer 2s.

This modular approach allows Ethereum to scale without compromising decentralization, opening the door to millions of daily users and enterprise-grade applications.

Conclusion: The Layer 2 Era Has Arrived

The Ethereum Layer 2 landscape in Q1 2024 is more than just hype — it’s a strategic evolution. These networks are solving real problems, enabling new applications, and attracting a diverse mix of users and developers.

With Ethereum’s roadmap continuing to emphasize modular scaling, Layer 2s will play a central role in how the network grows — not just for DeFi degens and NFT collectors, but for fintech, social, and global infrastructure.

If 2021 was the year of DeFi, and 2022 the year of reckoning, then 2024 may be remembered as the year Ethereum scaled — for real.