Layer-2

Starknet to hand 10% of network fees to devs, with $3.5M in first distribution

The Devonomics initiative from the Starknet Foundation aims to return a portion of network fees to incentivize developers.

Layer-2 network StarkWare and the Starknet Foundation are set to distribute a 10% cut of network fees to developers, a part of a pilot program called “Devonomics.” 

In an announcement shared with Cointelegraph on Dec. 12, StarkWare CEO Uri Kolodny said it was allocating a portion of the network fees, provisionally 8%, to decentralized app builders and 2% to infrastructure engineers and core developers through a transparent and open voting process.

“It’s all about giving the hands-on builders a strong voice in shaping the network,” explained Kolodny.

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Polygon’s ‘holy grail’ Ethereum-scaling zkEVM beta hits mainnet

Ethereum layer-2 scaling platform Polygon has released its zkEVM to mainnet beta, allowing developers to deploy smart contracts with increased finality and lower costs.

Polygon has released its open-source zkEVM Ethereum scaling technology to the mainnet, promising reduced transaction costs and increased throughput of smart contract deployments.

Polygon’s zkEVM is a zero-knowledge rollup (ZK-rollups) scaling solution equivalent to the Ethereum Virtual Machine. ZK-rollups increase throughput on Ethereum’s blockchain by batching computations and state storage to layer-2 platforms. The technology allows thousands of transactions to be batched off-chain, with a proof containing a minimal data summary posted to the Ethereum mainnet.

Polygon’s zkEVM is a type of ZK-rollup that mimics the transaction execution environment of Ethereum’s mainnet. The open-source zkEVM is touted to allow decentralized applications (DApps) to scale through transaction batching, unlocking higher performance.

Gas fees are also set to be reduced for DApp users, which could drive wider adoption, while the use of zero-knowledge proofs sees Polygon zkEVM inherit Ethereum’s network security. Lastly, equivalence with Ethereum means that developers can simply copy across existing smart contracts to Polygon’s zkEVM.

Related: Polygon, Immutable zkEVM to tackle ‘huge incumbents exploiting players’

Cointelegraph spoke to Polygon co-founder Sandeep Nailwal ahead of the mainnet beta launch to unpack the significance of the milestone and the anticipated effect zkEVM will have on the wider Ethereum ecosystem.

Nailwal described ZK proofs as “the holy grail of Ethereum scaling,” allowing the layer-1 blockchain to simply verify a submitted proof without having to rerun computations:

“Imagine you computed a whole business transaction somewhere else off-chain on layer 2, but on Ethereum, you submitted a very succinct proof, and Ethereum 200% knows that you computed it correctly.”

ZK-rollups are also set to make Optimistic Rollups obsolete, according to Nailwal. The Ethereum blockchain essentially assumes Optimistic Rollups are submitting correct computations, while a network participant verifies the details of the transaction. This is part of the reason Optimistic Rollups on layer 2 have a seven-day withdrawal period:

“That’s why it’s a game changer. The community knows that Optimistic Rollups are like crutches before Ethereum figured out ZK. And now that ZK is there, it kind of makes Optimistic Rollups obsolete. This is the end game basically.”

Nailwal said the advent of ZK-rollups means that future development of the Ethereum ecosystem can focus on user experience, increased scalability and easier proofing to “open up the floodgates” for wider use.

While the zkEVM has been launched to mainnet beta, Nailwal stressed that the technology is in the end state of the product. The zkEVM will continue to be optimized as users increase and bug bounties and further audits will be carried out over the next couple of months.

Cointelegraph also queried whether ZK-rollups have brought the Ethereum ecosystem closer to solving the so-called blockchain trilemma coined by co-founder Vitalik Buterin.

“It is very close, actually. The blockchain trilemma says out of security, decentralization and scalability, you can choose only two. What you are doing is getting scalability somewhere else, computing something and getting the security and decentralization from Ethereum.”

Buterin was also involved in the launch of Polygon’s zkEVM on March 27, carrying out the first user transaction. Nailwal described the gesture as symbolic, given Buterin’s ongoing influence in the development of Ethereum.

Magazine: ‘Account abstraction’ supercharges Ethereum wallets: Dummies guide

zkSync Era launches with Uniswap and Sushi — First zkEVM on mainnet

A new Era has dawned with the launch of the first Ethereum Virtual Machine compatible ZK rollup, enabling projects like Uniswap and Sushi to easily port over for scaling.

Some of the biggest names in decentralized finance, including Uniswap, Sushi, Maker and Curve, are set to launch March 24 on zero-knowledge proof roll-up zkSync Era.

The Ethereum layer 2 scaling network has finally opened to users in alpha after four years in development, enabling faster and cheaper transactions. It is the first Ethereum Virtual Machine compatible zk-Rollup to launch on mainnet (competitor StarkWare uses a bespoke language called Cairo), allowing most Ethereum DApps to simply port over with very few changes.

Between 32 to 50 projects are expected to go live on March 24 or over the weekend, including Balancer, Pyth Network, Mute, Redstone, Graph and Argent. Banxa, Yearn Finance, Celer, Chainlink, Aragon, Woo Network and Tracer DAO are also porting to the network.

“Friday for us is the big one, it’s full launch alpha,” Anthony Rose, the head of engineering for zkSync developer Matter Labs, told Cointelegraph earlier in the week.

“But the systems are super complex and there’s a million other things we want to do.”

While zkSync Era can provide scaling “orders of magnitude” greater than Ethereum’s current 10 to 12 transactions per second (TPS), Rose said it would offer “tens of TPS” initially and scale up as demand requires.

The project launched its “fair onboarding alpha” on Feb. 17, allowing projects to port over and test out security and optimizations. Matter Labs said it spent $3.8 million on security testing, seven independent security audits and a bug bounty program to reduce the risk of any incidents.

What is a zk-Rollup?

Zk-Rollups — which include zkSync, Scroll and solutions from Polygon, StarkWare and Consensys — compute transactions away from the Ethereum blockchain while providing a tiny cryptographic proof that is written as a single transaction back on Ethereum showing that a bundle of other transactions has been carried out correctly. zkSync also employs recursion, which generates a proof showing a batch of other proofs (each representing many transactions) have been carried out.

Zk-Rollups can enable virtually instant withdrawals, giving them an advantage over optimistic-rollup layer 2s such as Optimism, where withdrawals take a week. However, zkSync Era will impose a 24-hour waiting period initially as a security precaution.

“The reason being is if you have some critical bug that has somehow got through the many different audits and security mechanisms and somebody completely drains the protocol, this is obviously a disaster for everybody involved,” he said. The waiting period is likely to be reduced to an hour within weeks.

Native account abstraction

zkSync has also enabled native account abstraction, meaning every account in the network is a “smart account” that can utilize two-factor authentication (2FA), social recovery, autopay transactions and more via smart contract wallet providers like Argent.

“This was and probably still is my favorite feature,” Rose said, explaining that it’s an improvement on Ethereum’s ERC-4337 implementation and will help remove the “jankiness” for new crypto users getting into the space.

“Scalability is fine, the infrastructure needs to be there. But it needs to come with a user experience that can also scale.”

Not decentralized yet

zkSync Era will not be fully decentralized on launch, so the team can implement fast fixes for any security or technical issues. However, a time lock will later be implemented so that the Security Council and community can sign off on decisions.

Like competitor StarkWare, zkSync relies on a centralized sequencer and prover, which are faster, but provide a centralized point of failure. Running a prover, however, requires the purchase of expensive hardware or renting cloud capacity at $10,000 a month, which makes decentralizing that aspect of the network tricker. Underscoring the challenge, the decentralized version of StarkWare is called StarkNet and is currently running at a paltry 0.11 TPS.

Rose said a new proof system was already being developed that substantially reduces hardware requirements and should be available on mainnet this year.

“So the idea for us is to get through this, then start talking about how we upgrade the proof system to be such that we can be meaningfully decentralized,” he said.

“There’s lots of hard problems to solve to make the systems real.”

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Ethereum layer-2 solutions may focus less on token incentives in the future

Token incentive models may become obsolete as layer-2 networks focus on ease of functionality and low fees, but how will this impact decentralization?

Layer-2 networks continue to gain momentum as the Ethereum ecosystem advances. For example, data from analytics provider Token Terminal found that layer-2 scaling solution Polygon had 313,457 daily active users as of Jan. 17, 2023 — a 30% increase in activity since October 2022. 

Moreover, the Polygon ecosystem recently announced the launch of its beta version Zero-Knowledge Ethereum Virtual Machine. As a result, Polygon’s native token, Polygon (MATIC), maintains a bullish narrative.

While notable, some believe layer-2 networks offering token incentive models may soon become obsolete. For instance, Jesse Pollak — head of protocols and Base core contributor at American crypto exchange Coinbase — told Cointelegraph at ETHDenver 2023 that there are currently no plans to associate a token with Base, the Ethereum layer-2 network recently launched by Coinbase. He said:

“We think about tokens as a powerful incentive tool that can change user and developer behavior. At the same time, we have seen situations unfold over the last few years where tokens have been used as an incentive mechanism with a lack of product fit for the underlying chain. Tokens have also resulted in nefarious or risky situations in the past.”

According to Pollak, Base is a layer-2 solution that allows developers to easily build applications without requiring an incentive mechanism. “Our product will stand on its own. It will be very easy for developers to use to build applications and distribute those to real human beings,” he said.

Shifting focus from token models to user experience

Focusing on ease of use and distribution are important points, as Pollak pointed out that many of today’s decentralized applications have been used solely for trading cryptocurrencies. “Trading is not enough to make cryptocurrency the future of the economy. At Base, we are making it easy for developers to build useful applications that people actually want to use,” he added.

Pollak explained that Base is investing in core infrastructure, such as Ethereum Improvement Proposal 4844, which will make the network secure and low-cost compared with other layer-2 networks. “It costs about 10–15 cents to conduct transactions on layer-2s. We aim to bring that down,” he mentioned.

While Base launched its testnet in February, Pollak shared that the Base mainnet launch will take place in the coming months. Moreover, while no plans exist for Base to offer a native token, several ecosystem participants have already expressed interest in building on Base.

Recent: Next stop Shanghai — Ethereum’s latest milestone approaches

For example, Konstantin Richter, chief operating officer and founder of Blockdaemon — a blockchain infrastructure provider — told Cointelegraph at ETHDenver 2023 that Blockdaemon will serve as an official infrastructure partner for Base. Richter shared that he thinks Base shouldn’t have a token associated with the network, as he believes proof-of-stake (PoS) is an entirely broken system. “Blockdaemon runs more PoS nodes than anyone else, and I can tell you that proof-of-stake only works when token prices go up,” he said.

Richter further explained that Blockdaemon plans to use the Base network to determine how to allow network participants to run nodes while possibly earning a fixed U.S. dollar fee. “This may result in a different type of PoS mechanism, possibly around commitment of compute rather than a staked percentage of tokens that may not serve the network well,” he said. Richter added that such a model could result in a better user experience. He said:

“This could be the biggest paradigm shift within the cryptocurrency ecosystem since the invention of PoS. We are moving away from incentive models that reward users for using a product. We are now focused on ease of functionality and low fees.”

Yet it remains questionable how exactly Base will attract users and developers to the platform without a token incentive model. Given Coinbase’s vast understanding of institutions and decentralized finance (DeFi), Richter doesn’t think this should be an issue: “I prefer to work with Base given Coinbase’s understanding of institutions and DeFi. It’s remarkable that a public Fortune 500 company is committed to putting transactions transparently on Base.”

While it’s too soon to predict future outcomes, it’s important to note that Arbitrum, another Ethereum layer-2 network, also functions without a native token. This has certainly not stopped users from interacting with the Arbitrum network. According to data from the analytics website L2Beat.com, Arbitrum has about $3.35 billion total value locked, making up about 54% of the market share on Ethereum.

However, rumors have been circulating that Arbitrum may initiate a token airdrop in the future. While this may or not be the case, it demonstrates Arbitrum’s ability to determine product market fit before launching a token. Gil Rosen, president of the Stanford Blockchain Accelerator, told Cointelegraph at ETHDenver 2023 that finding product market fit is about ensuring projects acquire the right customers whose value is accretive to the ecosystem, which often isn’t the case with tokens. “Early projects that launch tokens are often locked into tokenomics models before finding product market fit and then are unable to pivot dynamically,” Rosen said.

“DeFi Dad,” a partner at digital asset investment firm Fourth Revolution Capital, told Cointelegraph that he believes the main driver behind layer-2 tokens is to ensure decentralized control over layer-2 networks.

For example, he explained that the upcoming launch of zkSync’s Zero-Knowledge Ethereum Virtual Machine would use a PoS mechanism to allow zkSync tokenholders to act as stakers. “Layer-2 tokens are necessary for building the decentralized future,” he said.

DeFi Dad thinks a layer-2 network without plans to implement a native token could be successful if users are willing to sacrifice decentralization and censorship resistance in the short term. 

Recent: Banks with crypto services require new Anti-Money Laundering capabilities

He said, “Base could be successful as a network for transacting with a user’s crypto. However, make no mistake; Base will be a layer-2 (at least for the foreseeable future) that makes trade-offs. As DeFi users, we tend to deprioritize security and censorship resistance until we really need it.”

With this point in mind, Rosen mentioned that he believes token models will remain for many decentralized projects with large developer and user communities, but these will launch later. “A project may launch a token when the networks themselves are more mature and have found product market fit.”

Coinbase CEO hints its new layer-2 network could include AML measures

Brian Armstrong said centralized firms have a responsibility to monitor transactions and carry out Anti-Money Laundering checks.

Coinbase CEO Brian Armstrong has hinted that the firm’s new layer-2 blockchain network Base may be subjected to transaction monitoring and Anti-Money Laundering measures at launch.

In an interview with Joe Weisenthal on Bloomberg Radio on March 6, Armstrong acknowledged that Base has some centralized components today, adding that “it will be more and more decentralized over time.”

However, he then suggested that there will be transaction monitoring and AML requirements for users of the new layer-2 network.

He suggested that Coinbase will have a responsibility in terms of transaction monitoring in the early days, adding:

“I think that the centralized actors are the ones that are probably going to have the most responsibility to avoid money laundering issues and having transaction monitoring programs and things like that.”

Armstrong’s comments were also highlighted up by decentralization advocate Chris Blec in a Twitter post on March 7.

Base is an Ethereum layer-2 network that offers a secure, low-cost, developer-friendly way for users to build decentralized apps, according to Coinbase.

It is being developed with the “OP Stack” used by Optimism, which will enable high-speed transactions on Ethereum. Base was unveiled on Feb. 23 and is currently in the testnet phase. Coinbase has yet to provide a mainnet launch date but it is expected in Q2, 2023.

Blec previously warned about Coinbase’s latest layer-2 offering in a blog post released in late February, five days after the firm announced Base.

He said that layer-2 infrastructure was quite centralized because they use “sequencers,” which are “nodes that construct and execute L2 blocks while transmitting users’ actions from L2 to L1.”

Coinbase, a licensed money transmitter, will be operating the sole sequencer for Base. This raised the question of whether Base would also legally require Know Your Customer (KYC) requirements, making it the first-ever L2 to do so.

Related: L2 is crucial to Ethereum decentralization, censorship resistance, says researcher

Coinbase hasn’t confirmed or denied whether Base would be implementing KYC and AML measures. Blec commented:

“Isn’t it ironic that ‘DeFi’ is heading toward being controlled by the entities that it was originally supposed to be battling?”

However, the crypto community and Ethereum advocates have said Base was a “massive confidence vote” for Ethereum.

Cointelegraph reached out to Coinbase for comment but had not received a response by the time of publication.

ConsenSys zkEVM set for public testnet to deliver secure settlements on Ethereum

ConsenSys will release its zkEVM rollup to its public testnet on March 28, paving the way for an eventual mainnet integration later in 2023.

ConsenSys has announced the upcoming release of its zero-knowledge Ethereum Virtual Machine (zkEVM) rollup to a public testnet on March 28, allowing for stress testing of the layer-2 scaling technology.

ConsenSys’ research and development team has been working on its zkEVM rollup over the past four years. The zkEVM is touted to offer fast finality, high throughput and security of settlements on the Ethereum blockchain.

A private beta launched in Q4 of 2022 gave early access to limited users, which processed over 350,000 transactions and onboarded various decentralized applications (DApps). The testnet allowed Solidity developers to build, test and launch DApps while testing the zkEVM at scale.

ConsenSys zkEVM is the culmination of work from teams at Infura, Truffle and MetaMask, as well as developers on Besu and Gnark. Integrations and features of the rollup were aimed to remove developer complexity, improve security and expedite onboarding times.

An announcement shared with Cointelegraph highlighted zero switching costs as a benefit to projects in the ecosystem. Developers can build on the zkEVM or migrate existing DApps without changing code or rewriting smart contracts. The zkEVM also uses Ether (ETH) for gas fees, cutting out the need for third-party code translation and other middleware solutions.

ConsenSys zkEVM integrates with MetaMask, which is aimed to expedite the onboarding of users. Infura integration also allows developers to ship DApps at scale. Developers will also be able to build, test, debug and deploy Solidity smart contracts with a variety of layer 2 developer environments powered by Truffle.

ConsenSys also aims to keep its zkEVM open-source after launch. Nicolas Liochon, head of research and development at ConsenSys, told Cointelegraph that the goal of the public beta testnet is to trial the system under the same conditions it would face on mainnet where the stakes are higher.

“Users and developers will be able to permissionlessly interact with our technology stack allowing us to stress test the system under challenging and adversarial conditions.”

Following integration with the public testnet, ConsenSys will carry out a system outgrade. This is aimed at laying the foundation for a “highly performant, trustless, and decentralized network,” according to Liochon.

The final upgrade will also start its auditing and security process to ensure the zkEVM is safe and secure before a mainnet launch earmarked to take place later in 2023.

ConsenSys is in discussions with leading players in the Ethereum ecosystem to deploy and integrate with its zkEVM testnet. Liochon highlighted the focus on making the scaling rollup EVM-equivalent a key factor in making it easy for DApps and tools to switch to its zkEVM.

Liochon also said efforts to make decentralized and trustless applications available to the public require simpler and cheaper systems. The zkEVM aims to achieve this by building a trustless, censorship-resistance, decentralized and performant execution layer that scales Ethereum.

Collaboration with the wider layer 2 ecosystems is also a focus for ConsenSys. Liochon said the organization is looking to work with innovators in the space to convene the first zkEVM “multi-prover” rollup.

This type of scaling rollup would have multiple prover implementations generating validity proofs of computation.

Bitcoin market cap ‘flips’ payments giant Visa for the 3rd time

While the collapse of FTX shaved $100 billion off of BTC’s market cap in just four days last year, BTC has managed to fully recover and stack on another $65 billion.

A 48% Bitcoin (BTC) price surge since the start of the year has pushed BTC’s market cap past that of payment processing giant Visa once again.

With the BTC price currently at $24,365, its market cap of $470.16 billion is now marginally above that of Visa, which has a market cap of $469.87 billion, according to CoinMarketCap.

BTC has “flippened” Visa again. Source: CoinMarketCap.

This is the third time that BTC has “flippened” the market cap of Visa, according to Companies Market Cap.

The first time came in late December 2020, when BTC also happened to hit $25,000 for the first time. This was achieved during a price surge that saw BTC rally from $10,200 in September 2020 to $63,170 seven months later, in April 2021.

Visa re-took the lead between June and October 2022, which then saw BTC surpass Visa for a very brief moment on Oct. 1 before the payments company re-captured the lead again.

This lead was widened when the collapse of cryptocurrency exchange FTX shaved off over $100 billion from the BTC in four days between Nov. 6-10, 2022.

However, since then, BTC has fully recovered and stacked an additional $65 billion on top of its Nov. 6 market cap of $408 billion to overtake the payment processing giant.

It should be worth noting that given the small difference in market cap between BTC and Visa, the two are currently flipping each other by the hour. 

Related: What is the Lightning Network in Bitcoin, and how does it work?

As for BTC’s impressive start to 2023, its third “flippening” of Visa came on the back of 14 consecutive days of price increases between Jan. 4-17.

BTC is also well ahead of the second largest payment processing network Mastercard, which currently has a market cap of $345.24 billion, according to Google Finance.

BTC is still however down 63% from its all-time high of $69,044, which it reached on Nov. 10, 2021.

Polygon sets late March launch date for its zkEVM mainnet beta

The Ethereum scaling solutions provider is preparing to launch its long-awaited Ethereum Virtual Machine roll-up technology.

The long-awaited scaling upgrade from Ethereum layer-2 solution provider Polygon (MATIC) has been announced, with the beta launch of its zero-knowledge Ethereum Virtual Machine (zkEVM) mainnet slated for March 27.

In a Feb. 14 blog post, Polygon said that after three and a half months of “battle testing,” the system will be ready for the mainnet launch next month.

It’s been touted as “seamless scaling for Ethereum,” and was launched as a testnet in December last year.

The development of the zk-rollup scaling technology has been ongoing for the past three years. During that time, the Polygon zkEVM system has hit several milestones noted by the team.

These include the deployment of more than 5,000 smart contracts, the generation of over 75,000 zk-proofs, more than 84,000 wallets and two public third-party audits.

A graphic detailing the development so far leading up to the launch. Source: Polygon

The team noted that security is the highest priority and that’s the reason “why Polygon zkEVM has been run through a gauntlet of tests and audits.”

The technology uses zero-knowledge proofs — cryptographic confirmations that, in the context of scaling, enable platforms to validate mass amounts of transaction data before bundling and confirming them on Ethereum.

Polygon is not the only team working on a zkEVM solution. Scaling provider zkSync is developing similar EVM technology with its zkPorter — which puts essential transaction data off-chain.

Scroll, another scaling solutions provider, is also building a zkEVM solution in collaboration with the Privacy and Scaling Explorations group, part of the Ethereum Foundation.

The Ethereum Foundation is also funding a project called Applied ZKP, which aims to develop an EVM-compatible zk-rollup.

Related: Polygon tests zero-knowledge rollups, mainnet integration inbound

The team explained the significance of the technology, stating that true EVM-equivalence means Ethereum can be scaled “without resorting to half-measures.”

“The best way to scale Ethereum is to preserve the existing Ethereum ecosystem: code, tooling, and infrastructure needs to just work. And that’s what Polygon zkEVM is aiming to achieve.”

The scaling tech also enables significant transaction cost savings. Proof costs for a large batch of hundreds of transactions are down to about $0.06 and less than $0.001 for a simple transfer, the team added.

Matter Labs, the firm behind Polygon, raised $50 million in a Series B round led by Andreessen Horowitz to build EVM-compatible zk-Rollups in November 2021.

Polygon’s native token, MATIC, has reacted positively to the announcement with a 5.3% gain over the past 12 hours or so. As a result, the token was trading for $1.24 at the time of writing, according to Cointelegraph data.

Soaring growth of Ethereum layer-2 networks set to continue in 2023

Leading layer-2 networks on Ethereum have seen a surge in daily active users and fees recently.

Ethereum layer-2 networks have gone through an explosive growth phase over the past couple of months, a trend that is set to continue in 2023.

According to recent data, the leading layer-2 networks have seen an increase in daily active users thathas translated into a growth in fees for the respective ecosystems.

According to analytics provider Token Terminal, Polygon leads the pack with 313,457 daily active users as of Jan. 17, a metric that spiked to over 600,000 daily active users earlier in January.

That’s a 30% increase in activity since the beginning of October, resulting in nearly $55,000 worth of daily fees for Polygon.

Optimism has seen even faster growth, with a 190% gain in daily active users over the past three months. This resulted in daily network fees of $119,475, a gain of almost 140% since the beginning of the year.

Arbitrum One currently has 41,694 daily active users, an increase of around 40% over the past three months. Daily fees on the network are just over $40,000, according to the data.

Meanwhile, L2 ecosystem analytics platform L2beat states that Arbitrum has a market share of 52% in terms of total value locked (TVL), which is currently at $2.55 billion. Aribtrum has seen a 9% increase in TVL over the past week.

Optimism, the second-largest L2 network, has a TVL of $1.46 billion, giving it a market share of 30%. Its collateral locked has surged by 15% over the past seven days.

The two together account for more than 80% of all the collateral locked in layer-2 platforms.

Related: Optimism and Arbitrum flip Ethereum in combined transaction volume

There has been an increase of almost 10% in TVL for all L2s over the past week, pushing the total TVL up to $4.89 billion. However, that figure is still down 34% since its peak in April.

Nevertheless, this decline is less than half of the retreat DeFi TVL has made since its all-time high. DeFi collateral has declined by 75% since December 2021, according to DeFiLlama, suggesting that there is greater demand and momentum for layer-2 networks at the moment.

Optimism and Arbitrum flip Ethereum in combined transaction volume

The two layer-2 networks processed more than 1.1 million transactions combined on Jan. 10.

Ethereum layer-2 on-chain activity has been increasing to the extent that the leading two networks now process more transaction volume than mainnet Ethereum.

Layer-2 networks Arbitrum and Optimism have seen an increase in transactions over the past three months. Comparatively, aside from a few spikes, transactions on the Ethereum network have declined by around 33% since late October, according to Etherscan.

This has enabled the two L2s combined to flip Ethereum for this metric, according to Dune Analytics data.

The chart shows Ethereum processed over 1.06 million transactions on Jan. 10, whereas Arbitrum and Optimism combined processed over 1.12 million transactions.

Additionally, Optimism has now surpassed Arbitrum in terms of daily transactions following a steady uptrend in activity since September.

Layer-2 ecosystem analytics website L2beat reported all L2 activity in terms of transactions per second (TPS) surpassed that of Ethereum in October, and has remained above it since.

L2 activity in TPS – l2beat.com

On Jan. 10, Ethereum processed an average of around 12 TPS, compared to the L2’s average of nearly 16.5 TPS.

Arbitrum and Optimism combined represent almost 80% of the entire layer-2 ecosystem, according to L2beat.

Arbitrum One remains the market leader in terms of total value locked (TVL) with around $2.34 billion in collateral, giving it a 52.5% market share.

Optimism is in second place with a TVL of $1.28 billion and a 28.6% market share.

Cast your vote now!

According to Nansen researcher Martin Lee, decentralized finance (DeFi) protocols are one of the key drivers of the adoption of the Optimism chain.

Related: Can the Optimism blockchain win the battle of the rollups?

Other layer twos such as zk-rollup StarkNet have also been processing more transactions recently. StarkWare technology also powers other solutions including ImmutableX and dYdX.

In October, it was reported StarkNet was processing more transactions per week than the Bitcoin (BTC) network.

Additionally, Starkscan reports the network is at an all-time high in terms of TVL at $5.2 million.