zkEVM’s Network Activity and Captured Value Experience a Decline
zkEVM’s network activity and captured value experienced a decline last week, raising concerns about the L2 solution. However, the upcoming Dencun upgrade on Ethereum could potentially turn things around for zkEVM. The upgrade aims to reduce transaction fees, which could benefit zkEVM and other L2 solutions.
According to analysis from Artemis, zkEVM’s network activity, including daily active addresses and transactions, has been on the decline over the past week. This decline in activity has also impacted zkEVM’s captured value, as evident from the significant drop in fees and revenue.
The Potential Impact of the Dencun Upgrade
But there is hope on the horizon for zkEVM, thanks to the Dencun upgrade on Ethereum. This upgrade, set to take place on March 13th, is expected to enhance scalability and efficiency by reducing the costs of L2 transactions. One of the key features of the upgrade is the use of proto-danksharding, which will enable more transactions per second.
IntoTheBlock recently tweeted that the Dencun upgrade could reduce L2 transaction fees by up to 10 times. This significant reduction in transaction fees could potentially attract more transactions to L2 solutions like Polygon zkEVM in the coming months.
Competition and Challenges Faced by zkEVM
However, zkEVM still has a way to go to catch up with its top competitors in the space. According to Artemis, both daily active addresses and daily transactions on Polygon zkEVM were considerably lower than those of zkSync Era and Base.
Even in the DeFi space, zkEVM’s total value locked (TVL) remains lower than its competitors. Despite this, Polygon’s native token, MATIC, has seen a bullish trend, gaining over 10% in the last seven days. With a market capitalization of over $8.2 billion, MATIC currently ranks as the 14th largest cryptocurrency.
Looking Ahead
Overall, the upcoming Dencun upgrade holds promise for zkEVM’s future, but it still faces stiff competition in the market. Investors will be closely watching how the upgrade impacts zkEVM’s network activity and captured value in the coming months.
Analyst comment
Positive: The upcoming Dencun upgrade on Ethereum aims to reduce transaction fees, which could benefit zkEVM and other L2 solutions. The upgrade is expected to enhance scalability and efficiency, potentially reducing L2 transaction fees by up to 10 times. This could attract more transactions to zkEVM in the coming months.
Negative: zkEVM’s network activity and captured value experienced a decline last week, raising concerns about the L2 solution. Daily active addresses, transactions, and fees have significantly dropped.
Neutral: The overall market for L2 solutions remains competitive, and zkEVM still has to catch up to its top competitors in terms of daily activity and total value locked (TVL).
