The volume of net assets locked in protocols on various second layer (Layer-2) platforms on the base of the leading altcoin Ethereum (ETH) has fallen in the past two months. Analysts predict possible reasons for this dramatic decline.
Ethereum-based L2 altcoin projects fell 40%
Experienced analyst Patrick Hansen, a crypto venture advisor at Presight Capital VC fund, posted on his Twitter account Polygon (MATIC), Loopring (LRC), Curve (CRV), He shared the bearish dynamics of Immutlable X (IMX) and similar Ethereum-based second-layer platforms:
Ethereum L2s are currently struggling to meet high expectations – remember the L222 meme? The reality is that L2 TVL is at its lowest this year despite massive liquidity incentives and token farming efforts.
Analyst, the total locked value of Ethereum’s L2s (various net worth of assets injected into the protocols) fell to annual lows. In fact, they’ve dropped to $4.4 billion in equivalent. The last time this value was this low was in mid-October 2021.
L2s started losing steam in early April: their TVL has dropped 40% since then. The analyst emphasizes that this decline has occurred despite large liquidity incentives and token farming programs. Therefore, the analyst admits, “We can be sure that it is too early to talk about the L2 breakthrough,” admits
But this year, the Ethereum L2 breakthrough has been definitively accepted by Ethereum-Maxis. For now, this couldn’t be further from the reality, even before the crashes of recent weeks. L2 usage is limited at best.
Questions to answer
At the same time, the analyst looked at the correlation between second languages, the power of incentive programs, to see the true picture of what is driving the TVL of sophomore students down. and concludes that we need to consider the roles of different factors in these dynamics.
As we mentioned in the news of Kriptokoin.com, Ethereum’s DeFis are also heavily affected by the ongoing market recession. According to data provided by data aggregator platform DeFiLlama, DeFis lost 40% of TVL in just 30 days. Now, the net volume of assets locked in DeFis stands at $67.92 billion, down almost $100 billion from the historical maximum recorded in November 2021.
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