ETH L2 TVL grew 284% last month—why?

Why exactly has ETH L2 TVL seen a gain of 284% over the course of the previous month? It is all connected to the Goerli Merge, which has been eagerly anticipated by many.

According to information provided by DefiLlama, the total value locked (TVL) on Optimism, a layer-2 scaling solution for the Ethereum blockchain, has increased by a staggering 284% over the course of the preceding month. The vast bulk of TVL is made up of users lending and borrowing assets on Aave through Optimism’s layer-2 chain. This accounts for the vast majority of TVL’s total value.

ETH L2 TVL Surges

In anticipation of The Merge update, which will cause the blockchain to transition from a network based on proof-of-work to one based on proof-of-stake, investors have been bidding up the prices of digital assets that are connected to the Ethereum ecosystem.

The Ethereum engineers will test the Merge on the Goerli testnet on Thursday, August 11. If everything goes according to plan, the mainnet merging will be allowed on September 19 of this year. The Goerli mainnet merge is likely to be delayed in the case that there are complications during the merging process for Goerli.

A recent Ethereum developer telephone conference revealed that the launch date for The Merge will take place on September 19; this information was made public recently. Through rollups, also known as off-chain computations, the Ethereum layer-2 blockchain known as Optimism aims to both increase the size of the ecosystem and speed up transaction times. Optimism is used for the entry of transactions, whereas Ethereum is used for the completion of transactions.

This project hosts a total of 35 different protocols, some of which are decentralized exchanges like Uniswap and automated market makers like Velodrome and derivatives exchanges like Synthetix. The current capacity of the Ethereum blockchain, which is just 30 transactions per second, is insufficient to manage the overwhelming number of user trade orders placed on exchanges (including cancellations).

On the other hand, other researchers believe that the network will be able to expand up to 100,000 transactions per second if The Merge is implemented, and layer-2 solutions will increase this capacity even further.

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