Today, we will explore the top 4 L1 and L2 by revenue and explore how much revenue these blockchains actually retain. After all, revenue generation is one of the most important indicators of whether a chain can continue to develop. Here, we define revenue as: total revenue minus token issuance.
Layer 1
@Ethereum
In terms of revenue generated, Ethereum is far ahead of all other blockchains (both L1 and L2), with $2.22 billion in revenue over the past year. However, despite this impressive revenue, Ethereum recorded a net loss of $15 million.
The reason? The main reason for the losses is that the issuance of new tokens has outpaced its revenue, and after a strong performance in the second half of 2023, its earnings so far this year have turned negative. This can be largely attributed to the shift of transaction activity to L2, which reduces the fees paid directly to the world computer. Therefore, despite Ethereum's large transaction volume and network activity, this migration has caused its earnings to decline.
TRONDAO
TRON ranks second in terms of overall revenue, with $1.4 billion in revenue over the past year. This success can be directly attributed to the networkâs extensive stablecoin activity, which ranks second only to Ethereum among networks with the most stablecoins, thanks to heavy usage in developing economies such as Argentina, Turkey, and countries in Africa where high inflation remains an ongoing issue. While some may call it a one-trick pony, this âone-trick ponyâ has generated $271 million in revenue over the past year, making it the most profitable blockchain to date.
@solana
Solana also ranks at the top in terms of revenue, generating $157 million in revenue over the past year. Popularity as a memecoin hub, capital growth from airdrops, technical upgrades to address spam issues, and support for leading trends like AI have all contributed to its prominent visibility and strong revenues in this cycle. However, this growth has not translated into earnings. Taking into account the issuance of tokens to stakers and operating costs, Solana has posted a net loss of $2.53 billion over the past four full quarters, completely wiping out its revenue and leaving it in a black hole.
Avalanche @avax
Avalanche, which has its own memecoin fund, ranks fourth, generating $69 million in revenue over the past year.
Avalanche, known for its subnet scaling solutions and focus on gaming, is about to launch a major upgrade called ACP-77, which will improve the experience of deploying and managing subnets, making it more affordable and thus potentially increasing revenue. With this in mind, the chain still has a long way to go, as it faced a net loss of $860.6 million over the past year due to token issuance and operating costs.
Layer 2
Base
Despite being less than a year old, Base@coinbaseâs L2, launched alongside OPStack, has quickly become a success by generating $66.6 million in revenue since its inception. Notably, @base has managed to retain 63% of its revenue, netting $42 million in the same period.
This success can be attributed to two key factors: First, Base significantly reduced costs by implementing blobs through EIP-4844, slashing costs from $9.34 million in Q1 2024 to $699,000 in Q2 2024 Dollar. Secondly, Base has no native tokens, which makes it more competitive and avoids the distribution-related fees incurred by other L2s.
Decision
Arbitrum is the largest L2 by TVL, with a locked value of $17.2 billion and generated $61.14 million in revenue in the past year.
As the hub of DeFi, leading DeFi protocols such as GMX and Pendle are developed on Arbitrum, and its SDK also provides the main infrastructure for L3 such as SankoGameCorp, DegenTokenBase and XAI. Although the revenue has not yet reached the level of Base, Arbitrum has made $21.8 million in revenue in the past year, especially in the second quarter, when its expenses dropped to only $613,000, compared with $20 million in the first quarter.
zkSync Era
As one of the leading zero-knowledge (ZK) based L2s, @zksync generated $53.3 million in revenue over the past year.
Since the June 2023 airdrop, the networkâs locked-up volume (TVL) has increased significantly, with ZK technology adding approximately $850 million in value to the chain, although this amount has gradually decreased as users sell airdropped tokens. reduce. However, the chain has remained profitable, netting $15.3 million over the past year and $17.5 million over the past four full quarters. Although zkSync only ranks eighth in the L2 ranking, its profitability makes it the third most profitable L2.
ON Mainnet
At the heart of Superchain, @Optimism has generated $44.6 million in revenue over the past year through sorter fees on its mainchain and projects such as Zora and Base within the network.
In the second quarter of 2024, Optimism network activity reached record levels. The average number of daily active addresses increased to 121.6K, a month-on-month increase of 37%. Despite the sluggish market, the average daily transaction volume also increased to 601K, a month-on-month increase of 28%. Like other L2s, EIP-4844 contributed greatly to this growth. The reduction in fees increased network activity, which in turn increased Optimism's net profit by more than 150%. Despite this, Optimism is still deeply in the red, suffering a net loss of $239 million in the past year due to retroactive airdrops, incentive programs and operating costs.
When you look at this data, though, remember that, just like in traditional finance (TradFi), profitability is only part of the story. No one is betting trillions on NVIDIA based on its current financials, but rather the narrative behind it that drives its growth.
Narrative-driven investing is often the default choice for cryptocurrency buyers who want outsized returns on their risk-taking, but note that there are still networks that have built substantial businesses based on todayâs activity. By diving deeper into the revenues and earnings of the top L1s and L2s, we can get a clearer picture of the underlying health of these networks and their place in the competitive landscape.
