Ethereum Layer 2 TVL Trends Shift: Base Surges, Optimism Stalls, and Arbitrum Eyes a Comeback

Ethereum’s Layer 2 (L2) ecosystem is seeing a new wave of activity as Total Value Locked (TVL) shifts across the main scaling networks. Base is approaching its all-time high, Optimism continues to lag behind, and Arbitrum is in transition, moving from recent losses to signs of growth.

In recent weeks, Base has emerged as the strongest performer among Ethereum’s scaling solutions. Its total value locked is rebounding rapidly, and it has a clear path to reclaiming its all-time high. This surge reflects a renewed confidence in the Coinbase-backed layer-2 solution, which is basking in developer daylight, generous yield, and DeFi friendliness.

In contrast, Optimism keeps underperforming. Even with a generally positive atmosphere in the crypto markets, the total value locked (TVL) on Optimism remains stagnant and hovers around the same levels it reached in April. This current state makes one question not just the retention of users but also the incentive structure ecosystem participants have in place to keep them on Optimism. Though the perception of appearing a top contender in the L2 race for several months helped retain some semblance of an ambitious crypto project, recent trends would suggest a stronger catalyst is needed to keep participants interested in the Optimism ecosystem.

At the same time, Arbitrum occupies a sort of middle ground along the spectrum. Its total value locked is on the mend, but it’s more of a slow-and-steady sort of climb than the rocket ascent enjoyed by Base. This is, no doubt, part of some kind of grander design. Users are being nudged to pay closer attention to developments, and to look beyond the immediate appearances of any one protocol, before they reach any sort of recommitment stage.

In the last week, protocols that are based on Arbitrum generated grosses of $1.06 million in revenue. That figure translated into an 18% downturn compared to the previous week. While the number sounds alarming at first, it clearly represents yet another example of just how much revenues can fluctuate within the DeFi space.

An exciting recent development is that Gains Network has expanded its offerings to include 13 new tradable assets—both stocks and indices—launched just this week. The platform has already established itself as a top revenue generator among Arbitrum-based protocols, and it could be poised to see even more growth if these new offerings attract user interest. Gains Network generated $139,000 in revenue over the past seven days, placing it in second among Arbitrum protocols.

GMX still reigns as the top-earning protocol on Arbitrum. It remains a DeFi pedestal on Arbitrum, with a core user base partaking in perpetual futures trading, allowing GMX to generate $372,000, according to my Akaname output for October.

Following closely behind Gains Network is Ostium Labs, which pulled in $129,000. These three platforms are setting the pace, driving the majority of Arbitrum’s revenue, and keeping the ecosystem vibrant despite the temporary downturn.

Penpie and Aave are lower down on the list, with recorded figures of $55,000 and $52,000, respectively. These numbers, though not as large, do imply consistent engagement with and interest in some DeFi essentials like lending, staking, and governance.

The following weeks will be critical for Arbitrum as it looks to uphold its relevance while intense competition swirls around it. The latest revenue report suggests a short-term cooling-off, at least, for the company, but the very recent additions of new trading assets by some of the major players in the space, like Gains Network, point to a possible imminent volume turnaround. And if those assets succeed in attracting volumes, then user activity and capital flows back to Arbitrum could pick up again.

Conversely, the rapidly increasing TVL of Base indicates its possible emergence as a serious challenger. Its current onboarding process is straightforward, and its close relationship with Coinbase’s massive user base gives Base a unique method of attracting not just retail, but also institutional investors.

On the other hand, optimism must reevaluate its strategy. Low TVL continually and weak protocol activity consistently seem to suggest that optimism could be falling behind in the innovation cycle and might require either aggressive developer incentives as a kind of last resort or some kind of high-profile integrations to re-enter the public consciousness.

The Ethereum race at Layer 2 is an ever-changing event; however, it is one that alters the appearance of the Layer 2 ecosystem quite frequently, with more often than not an appearance of two overtaking another—at least for the time being.

Base surges ahead and Arbitrum recalibrates after a revenue dip; however, the Layer 2 solution that is Optimism is almost stagnated at this apparent crossroads.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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