Ethereum Layer 2 rollups, a technology designed to scale the Ethereum network, have witnessed a significant decline in new users and locked funds in recent weeks. According to data from The Block, the number of unique depositors using optimistic and zero-knowledge (ZK) rollups reached a yearly low of just 34,920 in the past week. This marks a 33% decrease compared to the prior week and a stark contrast to mid-April’s peak of over 250,000 unique depositors.
This downtrend coincides with a decrease in the total value locked (TVL) on Layer 2 rollups. TVL refers to the combined value of all cryptocurrencies locked within a specific blockchain protocol. In early June, rollups saw 36,100 unique depositors, the lowest since October 2022. This period also coincided with an all-time high of $25.7 billion in combined TVL for optimistic and ZK rollups. Since then, the TVL has dropped by more than 20% to $20.5 billion.
Several factors might be contributing to this decline. One possibility is a shift in user preferences. Another factor could be a lack of growth in the decentralized application (dApp) ecosystem on these Layer 2 solutions. Additionally, the airdrops of tokens by Arbitrum, Optimism, ZKSync, and Starknet in the past two years might have incentivized short-term user engagement without long-term commitment.
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The decrease in TVL is not uniform across both rollup types. ZK rollups, specifically, have been hit harder. Their TVL has plunged over 33% from $3.77 billion to $2.5 billion, likely due to a combination of fewer unique depositors and a recent surge in withdrawals. Over 20,000 unique addresses withdrew funds from ZK rollups in the last week alone, although this number is lower than the previous two weeks’ peaks of 40,000 and 48,000.
Despite the recent pullback, it’s important to remember that Layer 2 rollup TVL has still grown significantly year-to-date. The total value locked on these chains has surged by 74.77%, climbing from $22.6 billion to $39.5 billion. Whether this downward trend is a temporary fluctuation or a sign of deeper issues within the Layer 2 ecosystem remains to be seen.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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