Question in detail:

It finally happened. The great Flip everyone’s been waiting for — Optimism and Arbitrum have officially surpassed Ethereum in combined transaction volume. (What, you were expecting some other flippening?)

Use this historic event to compare and contrast these two major L2 chains. Include metrics such as total and average transaction volume, average transaction size, active users, new users added, and anything else you find relevant to this comparison.

Overview of analysis:

This investigation divided into the following parts:

• Investigation on performance of blockchains
  • Validate the flipping of transactions volume
  • Other metrics introduced on Methodology
• Behavior of users on blockchains

Methodology:

The data provided by Flipside has been used to handle this analysis. To handle this investigation the following steps have been passed as below:

• Performance of blockchains
  • Blockchains→ Ethereum, Arbitrum and Optimism
  • Metrics→ Volume of transactions, count of active and new users, ETH value of transactions, TPM, Average and total paid fee in ETH, Success rate of transactions
• Behavior of active users on blockchains

  • How sticky are users on each blockchain?

  • Retention of users on blockchains

  • Time difference between first two transactions

  • Distribution of users by count of transactions

    
    Conclusion: By aggregating the outcomes of the previous parts draw a conclusion about the impacts of L2 chains and their applications against Ethereum network

About Ethereum network:

Ethereum is a network based on blockchain technology that enables the creation of decentralized applications (dApp). These decentralized applications are created using contracts called smart contracts, and their distinctive feature is the absence of fraud, censorship, downtime, and third-party interference.

Ethereum runs on a decentralized computer network, called a distributed ledger or DLT (Distributed Ledger Technology). DLT itself has many sub-branches, blockchain being one of them. Blockchain manages the data of transactions and blocks. Computers that are responsible for processing transactions and building new blocks in blockchain networks are known as nodes; The more nodes there are, the more decentralized the network will be.

About Arbitrum network:

The Arbitrum One network is a rollup on the Ethereum network. The purpose of creating the Arbitrum network (and other rollups) is to solve the scalability problem of the Ethereum network. Blockchains seek to establish the three characteristics of scalability, decentralization and security. The conclusion we reached in the world of digital currencies over the past decade was that it is very difficult (if not impossible) to establish all three of these features in one network. Therefore, each network seeks to solve one of the missing sides in its own way; The base layer of the Ethereum network, which has two features of security and decentralization, is left to solve the problem through roll-ups. The increasing demand for Ethereum network block space has made this network more expensive (gas cost) in recent years. Arbiterum and other layer 2 utilities can greatly reduce the pressure by increasing the capacity of this network.

About Optimism network:

Optimism is a second layer solution, created to solve the scalability of the Ethereum network. Optimism in the word means optimism, and the optimism network is based on the same approach. The optimism network uses optimistic solutions to increase scalability. In this solution, Optimism, by collecting and executing transactions in its network and submitting them in a compact way and in the form of a transaction to the Ethereum network, will significantly reduce their scalability, speed of transactions and fees. In the an uptimism approach that the Optimism network uses, all transactions that are accredited by network validation are valid and processed. This process makes the transactions not validated separately and their processing time is greatly reduced. Also, each member of the network or Waliditors has the opportunity for up to a week, check the set of transactions made and, if the transaction is found, notify the network and receive a reward.

Part 1: Investigation on performance of blockchains

Conclusion:

By considering the outcomes of this analysis the following statements could be concluded:

• The development of blockchain technology, in addition to many benefits, has brought problems such as low speed of transactions and insufficient scalability. These problems have encouraged experts in this field to expand the L2 model, so that they can improve scalability by using second layer solutions and rollups while reducing the gas cost.
• As blockchains like Ethereum continue to expand, L2 solutions provide an opportunity for millions of new users. Although these scalable layer 2 ecosystems are still quite new and have a lot of work to do, 2022 is said to be the year of L2 for the Ethereum ecosystem; Because different networks are growing and attracting in this field.
• The high price of Ethereum gas will help the development of L2. Ideally in the future, new users won't even need to know L2. The experience will be seamless for them because they will never have to go back to it while enjoying the security of the Mainnet. Expanding bridges, mature L2 infrastructure, and fiat on-ramps help attract developer attention and user acquisition.

Findings:

First of all lets verified the flipping of transactions volume of Arbitrum and Optimism (combined) compared to Ethereum netwoek:

• The black line represents the combined volume of transactions on Arbitrum and Optimism networks.
• According to the next chart, the transaction volume of selected L2 chains (combined) has been passed the transactions on Ethereum over the past 2 months.

Findings:

One of the interesting parts of this investigation belong to the behavior of users on Ethereum and selected L2 chains:

• The time difference between first two transactions of Ethereum network is much higher than Arbitrum and Optimism networks and in my opinion the main reason of that is because of the higher transaction fee on Ethereum network and the acceptable speed of L2 chains.
• Over 52% of users on Ethereum network have made just one transactions on this network but this metric is low for Arbitrum and Optimism networks. For example, over 36% of users on Arbitrum made over between 2-5 transactions on this chain.
• The retention criteria indicates that the considerable count of users made their next transaction after 3 months. But, most of the users on Arbitrum and Optimism networks made their next transactions within the 24 hour of their first transactions.

Part 2: Behavior of users on blockchains

Findings:

This part is used to compare the performance of selected networks over various metrics:

• One of the best charts to emphasize the volume of transactions comparison on blockchains is normalized daily graph of transactions. When share of Arbitrum and Optimism (combined) passed the Ethereum network, the flipping occurred.
• Ethereum network has higher number of active users compared to Arbitrum and Optimism networks over the past2 months.
• The L2 chains are solutions for solving scalability of Ethereum network and as shown in the outcomes there are really cheaper than Ethereum network in paid fee aspect!
• The ETH value of transactions on Ethereum network is muck higher than Arbitrum and Optimism networks.
• The Arbitrum network has better performance on TPM investigation and the success rate of networks are high but Arbitrum experienced lower rate of success rate on December 20, 2022.

Useful links:

• Ethereum network
• Optimism network
• Arbitrum network

Author:

Credited by MZG

Discord handle: m.zamani#0361

Twitter handle: @GargariZamani