Layer 2 address activity is slowing down, but Arbitrum is going against the trend

On-chain activity for the leading Layer 2 networks has slowed of late, but the Arbitrum platform is bucking the trend according to recent findings.

Blockchain analytics firm Nansen has reported that the seven-day activity has declined in terms of addresses for many of the leading networks. Only the Ethereum L2 scale network Arbitrum has shown advantages for this metric.

According to the February 28 tweet, arbitration activity has increased by 12.7% in the past week. It reported that the network has had 46,200 unique active addresses in the past seven days.

Although the figure is much lower than other chains, it is the only one to show an increase in activity for the period. Layer two analytics platform L2beat reports that Arbitrum is still the market leader in terms of total locked-in value, at just over $3 billion, giving it a 54.9% market share. Defillama reports that the most popular protocol on the network is the SushiSwap DEX, but it also notes a higher TVL figure of just over $4 billion for the Polygon network.

Collateral locked to arbitrator has risen in recent days and is up 5.7% since Feb. 25. Conversely, rival network optimism at tier two saw a drop in TVL over the same period. Optimism has an 8% L2 market share with a total value of $444 million, and address activity is down 17.9% in the past week, according to Nansen.

Other tier two platforms, such as Polygon, have also seen a decline in terms of activity, as reported by Nansen. Polygon is down 10.9% in terms of seven-day active addresses and TVL on the network is down 15% in the past two weeks according to DeFillama

Nansen also reported weekly address activity declines of 2.7% and 2.9% for Binance Smart Chain and Ethereum, respectively.

Related: Blockchain Analytics Service Nansen To Include DeFi Protocol Arbitrum

The decline in on-chain activity is likely related to the cooling demand for decentralized finance (DeFi) as crypto markets have retreated this year. DeFiLlama is currently reporting that TVL is down nearly 19% for all publicly traded DeFi platforms from its all-time high in late November. However, it should be noted that this is likely due to a decline in underlying asset prices, which was much stronger than the decline in DeFi TVL.

It should also be noted that there are significant differences in TVL metrics between different analytics platforms (DeFillama and L2beat in this case), so numbers should be taken with a grain of salt.

Other indicators supporting the trend include a plateau in the supply of packaged Bitcoin (wBTC), which is also widely used on DeFi platforms.

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