L2 Networks Race Past Ethereum: Time to Buckle Up for a Price Rocket Ride?

In an unprecedented event, Ethereum’s layer 2 solutions, Base and zkSync Era, have now surpassed the very blockchain they aim to support, Ethereum. This monumental shift, reported by L2Beat on September 17, showcases not only the rapid development of these networks but also the immense potential they carry. Let’s take a look at this L2 networks article in more detail.

L2 Networks: The Numbers Tell the Tale

On that significant day, the Transactions Per Second (TPS) of both Base and zkSync Era exceeded Ethereum’s own TPS of 10.18. Specifically, Base recorded a TPS of 12.93, reflecting an impressive 49.76% increase within a week. On the other hand, zkSync Era wasn’t far behind with a TPS of 12.62.

Calculating the Previous TPS of Base:

Given that the TPS of Base increased by 49.76% within a week to reach 12.93, we can determine its TPS from one week ago using the formula:

Previous TPS=Current TPS/1+Percentage Increase

Using the provided values:

Previous TPS=12.93/1+0.4976

Previous TPS≈12.93/1.4976

Previous TPS≈8.63

So, one week ago, Base had a TPS of approximately 8.63.

Calculating the Increase in TPS for zkSync Era:

While the exact percentage increase for zkSync Era was not provided, we can calculate the difference between its current TPS and Ethereum’s:

TPS Difference=zkSync Era TPS−Ethereum TPS

TPS Difference=12.62−10.18

TPS Difference=2.44

So, zkSync Era’s TPS is 2.44 TPS higher than Ethereum’s.

L2 Networks: Unraveling the Significance

For those unacquainted with the jargon, Transactions Per Second (TPS) essentially measures how many transactions a blockchain network can handle within a single second. For context, consider a supermarket checkout. If Ethereum can process 10 customers a minute (akin to its 10.18 TPS), Base and zkSync Era can cater to nearly 13 customers in the same timeframe. This might seem like a small difference, but scale that to millions of transactions, and the difference becomes starkly clear.

What Does This Surge Mean for the Crypto World?

Optimized User Experience: With a higher TPS, users of Base and zkSync Era will experience quicker transaction times. It’s akin to being served faster in a cafe during the morning rush.
Increased Adoption Potential: As these networks showcase their capability to handle more transactions, they become more attractive to developers and businesses alike. Imagine if a popular gaming app suddenly became faster and more responsive – it would naturally attract more users.
Competitive Drive: This achievement by L2 networks might spark healthy competition. Ethereum, as well as other blockchains, might be driven to further optimize their systems to remain competitive.

L2 Networks and the Impact on the Ethereum Ecosystem

Supporting the Main Chain: While it might seem that these L2 networks are overshadowing Ethereum, in reality, they work in synergy. Layer 2 solutions were developed to alleviate the load on the main Ethereum network. By successfully doing so, they allow Ethereum to function more smoothly, thereby benefiting the entire ecosystem.
Attracting More DApps: Faster transaction speeds might lure in more decentralized applications (DApps) developers to build on these L2 solutions, further expanding the Ethereum ecosystem.

L2 Networks: Impact on Cryptocurrency Prices

Understanding the Dynamics:

Historically, advancements in the technological aspects of a cryptocurrency have often translated to heightened interest from investors, which can subsequently affect prices. The performance of a blockchain network, including factors like speed (TPS), security, and scalability, can play a pivotal role in determining its perceived value in the market.

Immediate Speculative Surge: Upon the revelation that Base and zkSync Era have exceeded Ethereum’s TPS, there might be a speculative rush. Traders and investors might interpret this as these L2 networks becoming more valuable, leading to an immediate increase in their prices.
Potential Boost for Ethereum: Even though these L2 networks surpassed Ethereum in TPS, it doesn’t necessarily spell bad news for Ethereum’s price. Layer 2 solutions are built to support and improve the Ethereum network. Their success can be seen as a testament to Ethereum’s robustness and its adaptability, which might bolster investor confidence in Ethereum itself.
Market Sentiment: If developers and businesses begin to adopt Base and zkSync Era more extensively due to their superior TPS, it can create a positive sentiment around these L2 solutions. This sentiment can drive more organic, long-term demand, leading to a steady appreciation in their prices.
Cautionary Note: It’s important to understand that while technological advancements can influence prices, the crypto market is also affected by a myriad of other factors, including global economic conditions, regulatory news, and broader investor sentiment. Thus, while an increase in TPS can be a positive signal, it’s always prudent for investors to consider the bigger picture and not make decisions based solely on one metric.

Conclusion

The rapid growth of Base and zkSync Era, outpacing Ethereum’s TPS, marks a milestone in the world of blockchain. As these L2 networks continue to evolve and improve, the broader crypto community can look forward to quicker, smoother, and more efficient transactions, paving the way for a more seamless decentralized future.