The crypto market has seen a shift in the flow of capital towards the blockchains running atop other blockchains known as Layer-2 solutions. These cha
ins have managed to attract a whole fleet of investors who are looking to employ cheaper, faster transactions with the support of major crypto players likeWhile Layer-2 solutions are a part of the Decentralized Finance market, the difference here is measured in the protocols deployed on them and on Layer-1 DeFi chains. The allure of easier and cheaper transactions has drawn investors in flocks, especially since the emergence of Base.
The Coinbase-built L2 chain, Base, was launched less than two months ago, in July this year. Since then, the chain has not been out of the investors' sights, and this is evident from the growth of the L2. Following its launch, Base managed to observe an increase in the total value locked on the chain, touching around $500 million at the time of writing, making it the third biggest L2 solution in the world, presently behind only Optimism and Arbitrum.
Akin to Base, Arbitrum, too, had a run-up this year following the launch of the native ARB token. The L2 solution took over Optimism and emerged as the biggest layer-2 blockchain in the world, with nearly $5.3 billion locked on it. At the moment, Arbitrum controls over half the funds locked in the Layer-2 market, with Optimism taking over another 25.4% of the market share.
In the past nine months, L2 protocols have seen the total value locked on them nearly doubled from close to a little over $5 billion to $10 billion at the time of writing. On the other hand, the Layer-1 DeFi protocols have noted no substantial change in the past nine months. The total value locked on the L1 chains has remained closer to the mark it was at in January this year.This makes for a concerning development as this sector is one of the biggest markets in the crypto space.
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