Ethereum L2 Protocols Were Expected To Make Hay As Gas Fees Soared But…It Was Not Meant To Be?

The bullish narrative built around Layer 2 tokens, as users got priced out of Ethereum’s ETH/USD mainnet, failed to materialize this year, as per Delphi Digital.

What Happened:  Instead, tokens that dedicated a part of their treasuries to incentivize users such as Polygon MATIC/USD and Avalanche AVAX/USD ate the lunch of L2 projects like Loopring and Arbitrum, the firm said in a note.

The independent research firm noted deterrents like the absence of L2 native tokens, rising gas costs on Ethereum’s network, and reducing farming emissions as the decline in L2 total value locked.

 “L1s have been the central narrative for the better part of this year. As the scaling wars heat up, it doesn’t seem like this trend will end anytime soon,” wrote Delphi Digital.

The firm said “market confidence” has resulted in the price of L1 chains lingering around all-time highs towards the end of 2021.

Delphi Digital pointed out that both Terra LUNA/USD and AVAX adoption has “grown significantly” through the year.

“Since Jul. 1, the number of addresses interacting with Avalanche increased by roughly 22x, while addresses using Terra grew by 22%,” noted Delphi Digital.

While Avalanche is a newer chain and is “bound to have a steeper growth curve,” that does not diminish the growth the network has seen this year, as per the research boutique.

See Also: How To Buy Terra (LUNA)

Why It Matters: LUNA has soared 13299% so far this year, while AVAX has shot up 3189% in the same time frame. MATIC’s year-to-date price shot up a whopping 14292%. In comparison, ETH rose 439.72% in 2021. 

At press time, over 24 hours, LUNA was down 5.2% at $87.37, while AVAX traded 2.5% lower at $122.62. MATIC rose 7.7% to $2.66. ETH traded 2.2% lower at $3,969.47.

On Wednesday, both MATIC and LUNA hit new all-time highs. MATIC rose to a new high of $2.70, while LUNA touched $97.88.

Read Next: Bitcoin, Ethereum, Dogecoin Consolidate: Miner Activity Suggests A Rally Could Come Soon

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Analyst ColorCryptocurrencyNewsMarketsAnalyst RatingsAvalancheBitcoinBlockchainEthereumLayer-1Layer-2Terra
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...