The Ethereum ecosystem has reached an unprecedented milestone, with its combined transactions per second (TPS) soaring to an all-time high. This surge is attributed to a sudden spike in TPS on a relatively unknown Ethereum layer 3 solution.
The #Ethereum ecosystem’s transaction per second rate reached a new all-time high, largely driven by a surge in activity on #Xai, a new layer-3 scaling solution focused on gaming applications. On June 16, Ethereum scaling networks, including layer-2 and layer-3 solutions,… pic.twitter.com/5DVQlPCg7v
— Satoshi Talks (@Satoshi_Talks) June 17, 2024
This Ethereum’s landmark achievement underscores robust growth and potential. According to recent data from L2beat, an analytics platform dedicated to Ethereum’s layer-2 scaling solutions, the combined TPS across Ethereum scaling solutions surged to 246.18 on June 16, highlighting significant advancements in the network’s scalability.
Ethereum, the second-largest cryptocurrency by market capitalization, has long grappled with scalability challenges. As decentralized applications (DApps) proliferate and user demand surges, the need for efficient scaling solutions becomes paramount. Scaling solutions, particularly Layer 2 and Layer 3 protocols, have been pivotal in this endeavor.
The TPS Surge And Top Performers
Layer 3 solution Xai emerged as a major contributor to this milestone. Powered by Offchain Labs, the firm behind Arbitrum One, Xai focuses on gaming applications and accounts for over 41% of the total transactions. Its TPS soared from a mere 1 per day before June 10 to an impressive 101.72 on June 16, driving the overall surge.
Other prominent players in this space include Base and Arbitrum, with Base recording nearly 33 TPS and Arbitrum 21 TPS on the same day. In fourth position was Proof of Play Apex, another game-focused Layer 3 scaler launched by Offchain Labs. Despite their high TPS, the total value locked (TVL) in Xai and Proof of Play Apex remains relatively modest at $1.38 million and $695,000, respectively. By comparison, Arbitrum One and Base, the two largest Ethereum scaling solutions by TVL, secured $18 billion and $7.6 billion.
Pros of the TPS Surge
The surge in TPS is particularly timely with Ethereum’s transition to its much-anticipated upgrade, Ethereum 2.0., or the “Merge”—a transition of the network from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism that further enhances its scalability and energy efficiency. As Vitalik Buterin, co-founder of Ethereum, noted in a tweet citing his blog, “Layer 2 and Layer 3 scaling solutions are essential in short to medium term, and Ethereum 2.0 will complement these efforts by providing a more scalable base layer.”
Different types of layer 2shttps://t.co/ry4VTtWhJ1
— vitalik.eth (@VitalikButerin) October 31, 2023
The combined efforts of various scaling solutions and the Ethereum 2.0 upgrade paint a promising picture for the future of the network. DeFi platforms and NFT marketplaces, which are transaction-heavy, have been major beneficiaries of these advancements. For instance, Uniswap, a leading decentralized exchange, recently integrated Optimism’s rollup solution to enhance its transaction throughput and reduce fees.
The TPS Debate
Comparing L2 activity to Ethereum using TPS is like counting the number of bills in your wallet but ignoring that some are singles, some are twenties, and some are hundreds. A much better metric is gas-per-second and Arbitrum One alone is already processing way more than L1. pic.twitter.com/oUfjOeY536
— Steven Goldfeder (@sgoldfed) January 23, 2024
Industry analysts often debate the significance of TPS as a performance metric for blockchains. Some liken it to counting the bills in your wallet without considering their denominations. Steven Goldfeder, a founder at Offchain Labs, aptly described this analogy. While TPS remains the most common metric, it doesn’t capture the full picture of a blockchain’s capabilities. Nevertheless, it remains a yardstick for assessing scalability and efficiency.
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