Optimism, Arbitrum, and Polygon: Assessing the State of Layer 2 Solutions

• Optimism leads Layer 2 networks for developer activity with a significant lead at a score of 541, with Starknet a distant second at 220, while Arbitrum takes the third spot at 110.
• Arbitrum leads in total value locked at $2.6 billion, with Base at $1.5 billion taking second spot; no other L2 has hit $1 billion in TVL.

The battle for the king of Layer 2s rages on. Some, like Arbitrum have attracted the biggest community of decentralised finance apps and boast total value locked in the billions. Others, like Optimism, have the most vibrant developer community and boast the highest developer activity over the past 30 days. On the market cap metric, Polygon is the undisputed leader at twice the value of second-placed Mantle.

L2s are built atop Layer 1s, like Ethereum and Solana, to offer scalability and lower fees while leveraging the main network’s security and decentralisation. While they all serve a broad set of users, there has always been competition between these communities for the title of the ultimate Layer 2.

As Santiment recently revealed, Optimism has pulled away from the pack in developer activity. The Ethereum L2, which operates its own software dubbed OP Stack, scored 541 for activity over the past 30 days. Starknet, which launched in November 2021, was a distant second, garnering 220. Arbitrum, at third, recorded a fifth of Optimism’s developer activity at 110, with Polygon getting a measly 20.43.

Here are #crypto's top #Layer2 #cryptocurrencies by development activity. This list is compiled by counting all non-redundant #github activity of each project, and averaging their daily activity over the past 30 days. #Optimism is currently at the top of this list, with 146%… pic.twitter.com/O1DX2QDuYW

— Santiment (@santimentfeed) May 1, 2024

Santiment pulls GitHub activity directly from the blockchain project’s repositories through a proprietary process, ensuring that it only captures the team’s efforts to improve the project and innovate.

The Battle of the Layer 2s—Market Cap, TVL, Price Action

While Optimism leads in developer activity, it falls behind other projects on several metrics. One key metric is total value locked, which accounts for the value staked in a network’s DeFi projects and dApps.

Arbitrum takes the crown for TVL with $2.63 billion in value locked; it even beats some prominent Layer 1s, such as Avalanche and Bitcoin. On Arbitrum, some of the projects contributing significantly to the TVL include Pendle, a future yield trading protocol active on five other blockchains; AAVE, the open-source liquidity protocol that initially launched on Ethereum; and GMX, a DEX that’s also on the Avalanche network.

Second for TVL among the L2s is Base, the L2 by Coinbase, at $1.5 billion. Recently, one of the most popular applications on Base, Friend.tech, launched its FRIEND token. While the launch faced significant glitches, as CNF reported, the token is now up 45%.

No other L2 has hit over a billion dollars in TVL, with Polygon the closest at $928 million.

However, for market cap, Polygon sets the pace at $6.77 billion, nearly twice that of second-placed Mantle. In the past day, Polygon’s MATIC gained 0.69% to trade at $0.73 despite a 20% dip in trading volume to hit $162 million.