CandleFocus

DeFi leads activities on L2 chains, but questions remain

Author: Content Editor
In 2024, decentralized finance (DeFi) and Layer 2 (L2) chains experienced significant growth, with activities such as DEX trading and lending being the main drivers of activity. Stablecoins played a crucial role in providing liquidity on L2 chains. Mantle and Base were the top L2 chains for DeFi activity, with meme token creation and small-scale liquidity pairs being prominent on Base. Ethereum continued to dominate the DeFi market, but L2 chains like Solana, TRON, and Binance Smart Chain (BSC) competed for a share of activity. Polygon was the most widely used L2 chain for cross-chain activities, interacting closely with Ethereum through liquid bridges. However, L2 chains have not fully achieved cross-compatibility with each other. L2 chains faced challenges in sustaining high transaction volumes after launching, as users often migrated to new chains for better airdrop incentives. However, L2 chains survived and grew through fat-fee apps and liquidity hubs, offering passive returns and trading opportunities. L2 chains have their own specific focuses and culture, with Linea hosting SocialFi activity and NFTs, Arbitrum being favored for gaming, and Base serving as a high-speed DEX platform and meme coin launchpad. Most L2 chains managed to achieve net gains despite paying L1 fees on Ethereum, except for Taiko, which operated at a loss due to frequent interactions with Ethereum blocks. Overall, L2 chains showed real activity and held bullish potential for Ethereum.

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