The surge of stablecoins on Ethereum layer-2 networks has been significant, with a total locked value of $13.5 billion. This growth is attributed to the increasing utility of stablecoins such as Tether (USDT), USD Coin (USDC), and USDe.
Stablecoins now have a circulation of $205 billion, highlighting their importance in global blockchain operations. Layer-2 solutions like Arbitrum One and Base are leading the charge, with Arbitrum having $6.75 billion and Base at $3.56 billion in locked stablecoins.
The Dencun upgrade in March 2024 has further accelerated this momentum by reducing transaction fees and enhancing user engagement. The upgrade has led to a dramatic increase in activity across Ethereum's layer-2 networks, with Base, Taiko, and Arbitrum experiencing significant growth in daily transactions.
However, not all layer-2 networks have seen the same level of growth. Tether continues to dominate the stablecoin market with a market capitalization of $140.88 billion, followed by USDC. The rise of stablecoins represents a fundamental shift in the digital economy, with implications for traditional finance and the broader cryptocurrency market.
The Dencun upgrade introduced a cost-saving mechanism called "Blobs," which reduces fees and contributes to a deflationary trend in ETH supply. Despite the reduction in transaction fees, Base and Taiko are showing signs of recovery, with increasing rent paid to the Layer-1 chain.
The growth of layer-2 networks is fundamentally reshaping the Ethereum ecosystem, with the potential for Ethereum's supply to become deflationary once again. Stablecoins remain at the forefront of this transformation.