Arbitrum Leads L2’s TVL, But Base is Quickly Closing the Gap

• Arbitrum maintains its lead in the Layer 2 space, but Coinbase’s Base is rapidly catching up in terms of TVL and user engagement.
• Based on meme token trading and micropayments, Base surpasses Arbitrum in daily transaction volumes, indicating rising user adoption.

Arbitrum maintains its dominance in the Layer 2 (L2) industry, with a total value locked (TVL) of almost $2.49 billion as of October 2024, according to IntoTheBlock.

Over 1 billion transactions carried out on the network represent a significant milestone that supports this accomplishment and solidifies it as the top L2 solution.

However, this leadership is rapidly being challenged by Coinbase’s Base, which has grown significantly. Base is already approaching a TVL of $2.24 billion and outperforming Arbitrum in terms of daily transaction volumes.

Base’s Rapid Growth Challenges Arbitrum’s Position in the Layer 2 Space 

Due to its streamlined design and focus on high-volume, low-cost transactions, Base is becoming increasingly popular with users and developers, which is driving its rapid growth. Base has grown into a hub for meme token trading and micropayments, surpassing Arbitrum in terms of daily transaction volume.

While Arbitrum is still the favored choice for decentralized finance (DeFi) protocols, with large contributions from platforms such as Aave V3, which accounts for around 30% of Arbitrum’s TVL, Base’s quick growth suggests that it may soon challenge Arbitrum’s supremacy in the L2 ecosystem.

Optimism, another important competitor in the Layer 2 area, has a TVL of approximately $680 million, trailing both Arbitrum and Base. While Optimism remains competitive, its position indicates that the struggle for L2 domination is becoming increasingly concentrated between Arbitrum and Base.

Arbitrum’s sustained success is closely linked to its tight integration with DeFi protocols. Platforms such as Aave V3 have integrated with the network, contributing significantly to its TVL and cementing its position as a prominent player in the decentralized finance industry.

Despite Base’s increased transaction volume, Arbitrum has retained its liquidity leadership by attracting significant cash from DeFi protocols, decentralized applications (dApps), and token projects.

On the other side, Base’s development trajectory indicates its growing appeal across a larger range of user involvement, particularly for smaller, high-frequency transactions.

The increase of meme token trading and micropayments on Base indicates a shift in user preferences, presenting it as a major competitor to Arbitrum’s dominance in the L2 market. Coinbase’s sponsorship also gives Base a distinct advantage, hastening its spread throughout the bitcoin industry.

As competition heats up, the future of the Layer 2 market may see these networks compete not only for liquidity, but also for developer and user involvement.

Arbitrum has been the top challenger, but the closing distance between it and Base signals that the situation may change significantly in the coming months. Both networks continue to attract significant amounts of liquidity and an ever-increasing number of users, each claiming their place in this quickly changing market.

On the other hand, as we previously noted, Synthetix, another well-known DeFi platform, has stated plans to improve the Arbitrum ecosystem further.

Synthetix plans to launch Multi-Collateral Perps, which will provide traders more freedom in their collateral selections, perhaps attracting new users and diversifying trading tactics inside Arbitrum’s burgeoning ecosystem. This advancement highlights Arbitrum’s continuing innovation and expansion, even as it competes with newer networks such as Base.

Meanwhile, Arbitrum’s native token, ARB, has experienced tremendous volatility, falling by 10.88% over the last 24 hours to around $0.5597. This dip comes after a broader market collapse, with Ethereum (ETH) down below $2,500.