A Closer Look at Rollup Profitability

Rollups have been an integral aspect of scaling Ethereum which comes as no surprise, given that they typically offer Ethereum-like experiences at a fraction of the cost. Additionally, rollups can also confer a faster transaction finality on Layer 2 (L2), which, for most use cases, is a plus point. This is evidenced by the growing total value locked (TVL) on L2s, especially optimistic rollups (ORs).

While it should be noted that these figures have been boosted by the Arbitrum airdrop, as well as Sybil activities on rollups that have yet to launch tokens, the relative majority of activities on rollups are organic. This can be seen from the slow increase in daily transactions, even after Arbitrum's airdrop. Rationally, Sybil activities should die off once the airdrop hype has passed. Instead, we see that rollups generally have more daily transactions now than at the start of 2023, even after the fall off from the peak hype in March.