In 2024, Ethereum's growth primarily came from Layer 2 (L2) chains, with the main network seeing little change. L2 activity led to a 400% growth for the Ethereum ecosystem, and this growth may reach 500% by the end of the year. L2 chains benefited from increased DEX activity, NFT revival, and stablecoin usage. While Ethereum served as a utility token, its importance in the crypto space remained with L1 serving as a settlement layer and for security, while L2 chains were well-established for app building. The busiest smart contracts on Ethereum reflected demand for on-chain swaps and stablecoin usage, with Uniswap and Tether being the top gas burners. L2 chains successfully scaled Ethereum, and Base, Arbitrum, Optimism, Taiko, and Gravity all contributed to transaction growth. The value of L2 chains could be estimated based on their capacity to carry stablecoins, with Arbitrum being a leader in this regard. However, the market for L2 chains suffered from over-supply, and the total market cap of L2 tokens was $22.4B, with most value concentrated in the top 10 coins and tokens. Optimistic and ZK rollup chains dominated the Ethereum market. Additionally, a market for using Ethereum to secure and finalize L2 transactions emerged. L2 chains paid blob fees and rent to L1, with Taiko being the most active blob poster. Validators still relied on the block subsidy for their earnings.



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