Ethereum Layer Two Solutions Rapid Growth

08.12.22 01:26 AM By Stormrake

Despite a savage bear market with valuations being decimated and severe levels of fraud and deception being exposed, Layer 2 solutions such as Arbitrum and Optimism keep on growing.

The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.

Layer 2 Gas Expenditure

Ethereum gas expenditure on batch posting transactions from layer two solutions to be secured on ETH mainnet are hitting all time high levels. This is not only being driven by insatiable user demand but a wide array of dApps now being supported on both Arbitrum and Optimism. These L2s provide a viable way to actively engage with DeFi and NFTs without the burdensome costs and long wait times on Ethereum mainnet.

The growth in users, transactions and spend on L2 solutions despite the bear market is worth noting and is a narrative that will well and truly take off in a bull market. Optimism already has a token that investors can pick up to partake in the narrative but be mindful of the large daily unlocks and wider macro picture.

Layer 2 Activity Boom

Optimistic rollups such as Arbitrum and Optimism continue their astonishing growth. This demand is being driven by better usability of layer 2 solutions and well designed onboarding mechanisms that make the the bridging experience much easier. The massive climb in daily transactions can be best exemplified by visiting l2fees.info as the cost of swapping tokens is currently 26 times cheaper on L2s than on ETH mainnet. With such incredible savings, it's no wonder that ETH users are flocking to these solutions.

BTC/USD key levels

Interactive chart: click on image for higher resolution

Bitcoin remains rangebound and holds well above our key level of $16,500 USD. BTC now has to overcome $17,189 before it can make another move higher. If it closes above $17,189 then the major resistance level comes in at $18,217.To the downside, if we lose $16,500 then the next major level of support comes in at $15,588. This can be triggered by further weakness in the US stock market and another 75bps rate hike out of the next FOMC meeting.

ETH/USD key levels

Ethereum has failed to reclaim $1,300 USD and this breakdown in market structure can weigh heavily on the coming trading sessions. If we close below $1,190 then we can expect a move towards $1,071 before major support kicks in. To the upside if we close above $1,300 on the daily chart, then we expect a move towards $1,472.

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.

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