Introduction

Ethereum’s off-chain scaling solutions, also known as Layer 2 scaling solutions, are implemented separately from Layer 1 mainnet and require no changes to the existing Ethereum protocol. Some solutions derive their security directly from layer 1 Ethereum consensus, such as optimistic rollups, zero-knowledge rollups, or state channels. Other solutions involve the creation of new chains in various forms that derive their security separately from Mainnet, such as sidechains or plasma chains.

Polygon is an example of a sidechain scaling solution. It is an interoperable layer2 network that uses a proof of stake (PoS) consensus mechanism. Because Polygon, and other sidechain-based solutions, rely on their consensus mechanism, many argue that they are not as secure as the Ethereum network. Optimistic and zero-knowledge are the two types of rollups. Optimistic rollups are optimistic in the sense that transactions are assumed to be valid. However, if an invalid transaction is suspected, a fraud-proof is run to see if this has taken place. Zero-knowledge rollups use validity proofs where transactions are computed off-chain, and then compressed data is supplied to Ethereum Mainnet as proof of their validity. Arbitrum and Optimism are two examples of optimistic rollups.

In this analysis, a comparison of three different Layer 2 scaling solutions of Ethereum, including Optimism, Arbitrum, and Polygon has been provided over the past 60 days.

Methodology

For the comparison of Optimism, Arbitrum, and Polygon, as well as the Ethereum blockchain itself, four different categories of transactions, transfers, swaps, and NFTs were evaluated by mainly using fact_transactions, fact_event_logs, and ez_nft_sales (if applicable) tables of the core schema of each blockchain’s database. The focus of the analysis was to measure metrics revolving around the number of transactions, the number of users, and transaction fees, and to determine the timely trendlines for each blockchain due to the fact that these metrics demonstrate the infrastructure capacity and overall health of a blockchain.

It is critical to mention that due to the huge difference between the scale of most of the measured metrics for each blockchain, a meaningful comparison was not achievable, especially to determine the changes in the trendlines over time. As a result, the min-max normalization approach was taken into account to rescale every value for each blockchain between 0 and 1, with 0 being the minimum and 1 being the maximum value for that particular metric over the measured period. When a value for a particular metric and a particular blockchain is close to 0, that means the blockchain is not doing well on that metric or better put, is in the decline phase. On the contrary, when a value is closer to 1, that means that the blockchain is growing or is in a good state. From the total share perspective, if all of the blockchains are at their maximum, the share of each of them would be 25%. Having a share of more than 25% is an indication that a particular blockchain is doing better at that specific metric compared to the others.

> The analysis was conducted on a daily time interval over the range of the past 60 days. By using the parameters above the dashboard, you can adjust them based on your desired inputs.

Swaps

• The average number of daily swaps is where the layer 2 solutions struggle. Only Ethereum has seen a month-over-month increase in its average number of swaps per day;
• On a daily basis, while Arbitrum has been able to maintain a steady position, Optimism and Polygon are not doing, especially in the last 2 weeks;
• On the contrary, Optimism has seen the most percentage increase in its average number of daily swappers compared to other blockchains;
• While Arbitrum and Ethereum have registered a slight increase in their average number of swappers, Polygon has seen a decline in its swappers;
• The recent swapper's activity has been almost equally divided between Optimism, Arbitrum, and Ethereum, especially since October 10th;
• In general, as Arbitrum and Polygon lose their daily share of swappers, Optimism has been gaining their share. Ethereum meanwhile, only preserved its position.

Conclusion

In conclusion, the comparison of user adoption and network activity on three Layer 2 scaling solutions of Ethereum, namely Optimism, Arbitrum, and Polygon has indicated that while the scale of Polygon’s values for different metrics has been much higher compared to Optimism and Arbitrum, and even Ethereum in some cases, the growth rate of these two roll-up scaling solutions, especially Optimism has been on par or even higher than Polygon. Polygon is not a new chain and has undergone many of its development in terms of user adoption, and while it still has a lot of room to grow, it mostly maintained its position in the current bear market. Arbitrum and especially Optimism on the other hand could be considered young blockchains which are experiencing a rapid pace of development. Segment-wise, the rollups have the upper hand in the transactions which also includes transfers. Their higher transaction throughput and cheaper fees have resulted in a considerable increase in their network activity. In the swaps, however, while it should have the same trend, it has not due to the fact that the swaps activity comes from the development of the entire ecosystem built on top of a blockchain. In other words, as more projects are being developed using Optimism and Arbitrum infrastructure, more tokens are being released, thus the swaps activity increases. NFTs on the other hand might be the most unpredictable segment in the crypto industry. While the decline of Ethereum’s NFT ecosystem has been the headline of news over the past few months, its scale has been much higher in the sense that there is a need for a paradigm shift for other blockchains in the overall NFT space to be able to reach the same level of user adoption and capital inflow. Overall, there have been positive signs of growth and development, as well as an increase in the network adoption and user activity on both Optimism and Arbitrum over the past few months. The data have suggested that the Merge was a step in the right direction to better provide the infrastructure for Layer 2s to improve. Nevertheless, it is worth mentioning that it would be a long run and the mass adoption will not come in a matter of weeks or even months.

Transfers

• Measuring the values for token transfers is another form of gauging a blockchain’s performance since it shows that users are engaged in the ecosystem and work with a variety of tokens;
• While Optimism and Arbitrum have had a steady increase in their monthly number of average transfers per day, the averages for Polygon and Ethereum have had their ups and downs;
• Ethereum has relatively maintained its position with its number of transactions per day changing in a range. Arbitrum has also been the same. However, Optimism has gained some of Polygon’s share, especially after the Merge;
• In terms of the average daily users who conducted a transfer transaction, Polygon had the most drastic increase in October. Percentage-wise, both Polygon and Optimism have seen a huge increase between August and October;
• Overall, all of the chains have registered monthly growth in terms of their users and have been in a similar and healthy position;
• Interestingly, the daily share of the normalized number of users on Polygon and Ethereum has surpassed Arbitrum and Optimism in recent weeks.

Transactions

• The average number of transactions per day on a monthly basis has shown that Optimism has had a steady increase over the past three months. Arbitrum after a massive jump from August to September and Ethereum has been slowed in terms of their growth. Polygon on the other hand has seen a decline in its average daily transactions;
• Both the normalized transactions per second (TPS) and the share of TPS for Arbitrum have been recently in a better state compared to the Optimism;
• In terms of users, Polygon has seen a massive increase in its raw number of daily users. Percentage-wise, the number of daily users on both Polygon and Optimism doubled between August and October;
• Arbitrum and Optimism performed better during September. However, October has been the month of Polygon in terms of user adaptation;
• The monthly increase in transaction fees and decreased amount of gas used for Optimism have been a positive indication of the network being used more often by its users
• The daily share of normalized transaction fees for all of the chains has almost divided equally between them, indicating that all of them are in a healthy state in terms of user activity.

NFTs

• As expected, the scale of NFT sales on Ethereum is much higher compared to its Layer 2s, even Polygon;
• However, it is worth mentioning that while the NFT sales on Ethereum are declining, and while Polygon struggling to maintain a steady sales activity, Optimism and Arbitrum are seeing a considerable increase in both their sales number and NFT buyers;
• Also, Optimism has been the biggest gainer on a daily basis. Arbitrum has also gained a portion of Ethereum and Polygon shares, especially after the Merge;
• From another perspective, both Optimism and Arbitrum have registered an increase in their daily number of traded NFTs and collections, while Polygon's status has stayed relatively the same.