Ethereum L2s Absorb Network Activity
Ethereum's rollup-centric roadmap appears to be working as intended, with a 33% increase in the L1 gas limit helping to shift activity to L2s like Arbitrum, Base, and Optimism. This migration is resulting in lower mainnet fees and enabling a new wave of high-throughput applications to launch first on Layer-2 networks.
The recent mainnet gas limit increase is a strategic move to enhance Layer-1 capacity, complementing the fee reductions from the Dencun upgrade. This allows more transactions to be processed directly on the main chain, but more importantly, it provides more blockspace for Layer-2 rollups to settle their bundled transactions, further driving down costs for users on L2s. Following the Dencun upgrade in March 2024, which introduced "proto-danksharding," Layer-2 transaction fees plummeted. For instance, average fees on Optimism dropped to as low as $0.05, and on Base, to $0.064. This dramatic cost reduction has been a primary catalyst for the surge in activity on these networks. The impact on transaction volume has been significant. In the 150 days following the Dencun upgrade, the daily average for combined transactions on major rollups more than doubled to 6.6 million, up from 3.2 million in the preceding period. By late 2025, Layer-2 networks were accounting for approximately 93-95% of all transaction activity within the broader Ethereum ecosystem. This migration of activity is evident in the growth of individual L2s. Base, for example, saw its on-chain revenue grow to $14.7 million by December 2024, capturing 63% of the total L2 revenue. Arbitrum continues to lead in Total Value Locked (TVL), while the "big three"—Arbitrum, Base, and Optimism—collectively process nearly 90% of all Layer-2 transactions. High-throughput applications in sectors like gaming, decentralized finance (DeFi), and social media are increasingly launching directly on L2s. For example, the gaming-dedicated Ancient8 chain was built as an Optimism Superchain, and platforms like RedStone are advancing oracle capabilities on Arbitrum. This trend is driven by the need for fast, low-cost transactions that the mainnet cannot accommodate. The success of the rollup-centric roadmap has led to a broader discussion about Ethereum's future. Co-founder Vitalik Buterin has recently suggested a shift in perspective, noting that L2s have been slower to decentralize than anticipated. He now envisions a future where the base layer also scales more aggressively and L2s focus on specialized use cases beyond just scaling. This evolving strategy includes further upgrades to Ethereum's core protocol. Plans are in place to continue increasing the gas limit and to implement native rollups, which would integrate ZK-EVM proofs directly into the base layer. This suggests a hybrid approach to scaling, leveraging both a more capable L1 and a diverse ecosystem of L2s. The economic implications are also becoming clear, with L2s generating significant revenue. However, this has led to discussions about value accrual, as most of the fee revenue is now captured on Layer-2, reducing the amount of ETH burned on the mainnet. This dynamic is reshaping the economic landscape of the entire Ethereum ecosystem.
