Ethereum is scaling, thanks to Layer 2's

If you were to look at the daily active addresses on Ethereum (layer 1) over the last few years, we have seen a steady increase but nothing face melting. Around a 2X which is great.

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https://preview.redd.it/mcu3o7ujpsw91.png?1906&format=png&auto=webp&s=240abae1692f0fadfc5cb2b234e7045ea6aaedaa

The additional ~200,000 addresses interacting daily represents an expanding community of users/devs/stakers. These people are likely price insensitive, hence their presence during the bear market.

However, this fails to tell the story of how Ethereum has scaled since the inception of Layer 2's.

It seems that Vitalik's vision of a 'roll-up centric roadmap' is coming to fruition. Here is a post back in 2020 when he first released these ideas for the future of Ethereum: https://ethereum-magicians.org/t/a-rollup-centric-ethereum-roadmap/4698

Fast forward to today and active users on L2's are beginning to overtake that on the base chain. In the past month, the number of active addresses on Polygon, Arbitrium and Optimism has increased by 85%. You can see below that the number of active addresses on these 3 L2's alone has surpassed that of the base Ethereum chain.

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Active addresses on L1 Ethereum vs top 3 L2's

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Some of those addresses on Polygon will include you avatar NFT loving dudes to just highlight one use case example of how these L2's are growing the scale on which Ethereum is used.

It is still relatively early days for L2's and the long-awaited arrival of Zero-Knowledge (ZK) rollups is about to be unleashed. This will likely drive this trend further. Importantly, all of this competition is driving fees on L2 to incredibly low values vs the base chain. Of course, you should be aware of the caveat that L2's may not supply the same security as the base chain. However, for most simple transactions you can see why people would choose L2 from the current pricing:

https://preview.redd.it/j2ho5t48lsw91.png?633&format=png&auto=webp&s=e9250e4df34ebb053cdc934987663cf353c1e2ae

Overall, the scalability that L2's have brought to Ethereum is fantastic, amplifying the network effects. However, they are taking some activity away from the base chain which reduces the fee revenue for Ethereum and thus may negatively affect its valuation. How this plays out over the next few years will be very interesting. As long as enough high-value transactions remain on the base chain, this will probably not be an issue. That is something that isn't really talked about a lot so I'd love to hear your thoughts.