Layer two activity passes the base chain, and fee revenue tells the story
More transactions now settle on layer two networks than on Ethereum itself. What that does to the economics is the interesting part.
Combined transaction throughput across the major Ethereum layer two networks now exceeds throughput on the Ethereum base chain by a wide margin, a crossover that happened quietly over the past year.
The engineering worked as intended. The economic consequence is more complicated and is being argued about openly.
How layer two works, briefly
Transactions are executed on a separate network and then posted back to the base chain in compressed batches. Users get the security guarantees of the base chain at a fraction of the cost, because the cost of posting is shared across everyone in the batch.
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