Transaction Fees on Ethereum Layer 2s Surged 400% Last Year: Report

Ethereum mainnet fees dropped 44% in 2023, signaling increased migration to cheaper Layer 2 scaling solutions.

By: Pedro Solimano Loading...

Transaction Fees on Ethereum Layer 2s Surged 400% Last Year: Report

Ethereum’s Layer 2s are enjoying widespread usage from users after last year’s Merge, according to a report by P2P lending protocol PWN.

Led by Arbitrum and Optimism, which witnessed a 190% and 103% surge in network fees, respectively, the overall Layer 2 ecosystem saw fees increase 400% from 2022 to 2023.

Layer 2 Fees chart
Layer 2 Fees

Along with soaring fees on Layer 2s come reduced costs for users on Ethereum’s mainnet, PWN reports. The network witnessed a 44% decline in generated fees, more than double the average for all Layer 1s.

It seems users are migrating in droves to Layer 2 solutions, with the move to Proof-of-Stake accelerating the transition.

Bitcoin, turbocharged by the Ordinals ecosystem, registered the highest growth among Layer 1s with a 461% surge in fees generated.

DeFi and NFTs Take A Dive

Decentralized exchanges suffered a 51% drop in total fees generated last year. Led by Uniswap, which commands 64% of the entire fee market, the DEX sector generated $871M in 2023.

Despite suffering a threatening hack in late November, KyberSwap was the only DEX that saw growth in its fee market, jumping 73%.

Lending platforms highlight a mixed bag in terms of the concentration of value and fees generated. The entire sector saw fees decline 36%, with market leader Aave mirroring that number. However, half the category dropped – with some, such as Maple Finance, dropping 99% – whereas the other 50% increased. Radiant was the top performer, generating 479% more fees over 2022.

Lending platform fees and volume chart
Lending platform fees and volume

The NFT marketplace sector was hit hard by last year’s grueling crypto winter. Fees plummeted by 87% despite Blur’s meteoric 2,718% rise.

Stablecoins are widely poised for growth this year, with USDC set for a comeback after a dismal 2023. It registered its first net supply increase since the collapse of Silicon Valley Bank last year – totalling a $1.23B rise on the year.