Layer 2 (L2) blockchain networks made significant strides in 2024, earning a combined $294.92 million in transaction fees, according to a report by CoinGecko. These networks are increasingly playing a pivotal role in scaling blockchain ecosystems, offering faster transactions and reduced costs compared to their Layer 1 (L1) counterparts.‍

Base Leads the Charge

Base emerged as the top-earning L2 network, generating $84.78 million in fees—a staggering 548.2% increase from its $13.08 million earnings in 2023. 

This growth came after Base’s mainnet launch in August 2023, which attracted strong adoption thanks to its retail-friendly features and integration with Coinbase. The report noted that Base’s quarterly fee earnings tripled from an average of $6.38 million in late 2023 to $21.20 million in 2024.‍

Other Rising Stars

Linea followed Base, earning $39.20 million in 2024, a 62% increase from the previous year. Much of its revenue came in the first quarter, driven by its Linea Park airdrop campaign. Optimism recorded $37.97 million in fee earnings, reflecting a modest 1.9% growth, while Arbitrum earned $44.10 million, despite experiencing a 30.1% drop from 2023.‍

Challenges for Established L2s

While newer entrants like Base showed remarkable growth, more established L2s faced challenges. Arbitrum and zkSync, for instance, saw significant declines in fee earnings. zkSync’s fees dropped 59.6%, from $60.04 million in 2023 to $24.27 million in 2024. 

Analysts attribute these declines to increased competition in the L2 space and the conclusion of airdrop campaigns that had driven activity in previous years.‍

L2s Compete with Layer 1 Giants

Layer 2 networks’ growing adoption underscores their critical role in addressing scalability issues for major Layer 1 blockchains like Ethereum. 

Despite the success of L2s, Layer 1 blockchains still dominate the fee landscape, with Ethereum alone earning $2.48 billion in 2024. However, L2 solutions are increasingly becoming the go-to choice for users seeking faster and cheaper transactions, particularly as more applications migrate to these networks.

Airdrop campaigns, in particular, played a significant role in boosting activity on networks like Base and Linea. However, the sustainability of such incentives remains a key question, as many networks saw fee declines after their campaigns ended.

As competition intensifies among L2s, their ability to innovate and offer unique value propositions will determine their long-term success.