July '24 Layer 2 Landscape Recap

The total value locked (TVL) of all Layer 2s (L2s) witnessed a 2.8% month-on-month (MoM) decline in July, while the total transaction count rose by 11.6% MoM. The magnitude of L2 TVL’s drawdown, along with the rise in L2 transaction count, suggests that there are still active users of L2s, though this could change if there is a prolonged pullback in the crypto markets.

Gas expenditure declined by 18.2% this month, from 361 ether to 295 ether, which contradicts the trend of increased user transactions. While lower gas expenditure implies that L2 operators are continuing to reap the cost savings of utilizing data blobs, their revenue has fallen disproportionately more, by over 38.5%.  Coupled with the fact that more transactions have been made on L2s in July, this confirms that gas prices on L2s are lower than before. Ultimately, a combination of low gas prices and increased user transactions show that the ultimate benefactors of Ethereum data blobs are L2 users, which was the original intention. However, this also raises questions about the long-term profitability of L2 operator nodes, potentially posing challenges for network decentralization efforts in the future.