Layer 2 address activity slows, but Arbitrum bucks the trend

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On-chain activity for major Layer 2 (L2) networks has been declining recently, however, the Arbitrum platform is bucking the trend, according to recent findings.

Blockchain analytics firm Nansen reported that seven-day address activity for many top networks was in decline. Only the Ethereum L2 Arbitrum scaling network showed gains for this metric.

According to his tweet on Monday, Arbitrum’s activity has increased by 12.7% over the past week. It reported that the network had 46,200 unique active addresses in the past seven days.

Although this figure is much lower than the other channels, it is the only one to have posted an increase in activity over the period. Layer 2 analytics platform L2beat reports that Arbitrum is still the industry leader in total value locked (TVL), which is just over $3 billion, giving it a market share of 54 .9%. Defillama reports that the most popular protocol running on the network is the SushiSwap DEX, but it also notes a higher TVL figure of just over $4 billion for the Polygon network.

Collateral locked on Arbitrum has risen over the past few days, rising 5.7% since Friday. Conversely, rival layer 2 network Optimism saw a decline in TVL over the same period. Optimism holds an 8% L2 market share with a total locked value of $444 million, and address activity has fallen 17.9% over the past week, according to Nansen.

Other Layer 2 platforms such as Polygon also experienced drops in activity, as reported by Nansen. Polygon has slowed 10.9% in seven-day active addresses and TVL on the network has fallen 15% over the past fortnight, according to DeFillama.

Nansen also reported a weekly drop in address activity of 2.7% and 2.9% for Binance Smart Chain and Ethereum, respectively.

Related: Blockchain Analytics Service Nansen Will Integrate DeFi Arbitrum Protocol

The decline in on-chain activity is likely related to cooling demand for decentralized finance (DeFi) as crypto markets have retreated this year. DeFiLlama is currently reporting that TVL for all listed DeFi platforms is down nearly 19% from its all-time high in late November. However, it should be noted that this is likely due to a drop in the prices of the underlying assets, which was much stronger than the drop in DeFi TVL.

It’s also worth noting that there are big differences in the TVL metric between different analytics platforms (DeFillama and L2beat in this case), so the numbers should be taken with a pinch of salt.

Other indicators supporting the trend include a plateau in the supply of Wrapped Bitcoin (wBTC), which is also widely used on DeFi platforms.

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