In the rapidly changing crypto landscape, two Layer-2 Ethereum scaling solutions, Arbitrum (ARB) and Optimism (OP), have experienced significant shifts in their transaction volumes and financial performance this year. Despite a notable increase in transaction activity, both networks have seen a drop in their Total Value Locked (TVL) and the value of their native tokens.

Data from IntoTheBlock reveals that Arbitrum and Optimism usage has increased fourfold over the past year. This growth was especially pronounced in the second quarter, following the adoption of EIP 4844. This proposal aims to boost Ethereum’s capacity to handle more transactions by introducing a more efficient transaction type, resulting in lower fees and enhanced processing capabilities.

Performance metrics and financial health

Arbitrum has experienced growth, with transaction numbers rising from under 1 million to a record 2.6 million late last month. Meanwhile, Optimism’s transactions increased to 800,000 in April and are now at 409,000. Despite fluctuations in performance, Arbitrum remains highly active, currently outpacing Optimism’s transaction count by over 1.5 million.

However, when assessing the overall sustainability of these platforms based on their financial health, as indicated by Total Value Locked, a different picture emerges. Total Value Locked represents the total investment within the platforms’ financial systems. Data from DeFiLlama shows that both Arbitrum and Optimism experienced a surge in Total Value Locked earlier this year.

Decline in Total Value Locked and Token Value

Arbitrum’s Total Value Locked at $3.1 billion, while Optimism’s reached $1 billion. During this period, adoption and investment increased. However, this trend has shifted, with Arbitrum and Optimism’s TVLs now at $2.852 billion and $712.34 million, respectively.

Several possible reasons could explain the observed decline in the Total Value of Loked and the value of ARB and OP tokens. These factors include changes in investor attitudes toward cryptocurrencies or broader market conditions affecting all cryptocurrencies. Specific updates or changes within these Layer-2 networks may also contribute to these trends.

Token price trends and investor sentiment

The price trends for ARB and OP have been less encouraging. Market analysis shows a depreciation in the value of both tokens, with OP failing to exceed the $2.2 resistance level and currently trading at around $1.7. Similarly.

Source: Tradingview

ARB’s resistance level is approximately $1 and is currently at $0.07 nearing its all-time low.

Source: Tradingview

The rising resistance indicates increasing negative sentiment, suggesting that investors are becoming more cautious about short-term price spikes. As these Ethereum Layer-2 platforms continue to evolve, they face the challenge of managing exponential transaction growth while navigating the unpredictable financial landscape of the cryptocurrency world.

Also read: Hackers Seized $176.2 Million in Crypto in June