Layer 2, Decentralized Exchanges Show Strong Growth on Ethereum in Q1 2022

However, the average daily active addresses increased nominally, implying most growth came from existing users.

AccessTimeIconApr 29, 2022 at 12:25 p.m. UTC
Updated May 11, 2023 at 6:58 p.m. UTC

Growth of some applications and services built on the Ethereum network have more than doubled in the first quarter of this year compared to last year, even as other blockchains gained favor among investors, research shows.

  • Value locked on layer 2, or scaling services built atop Ethereum, increased 964% to $7.3 billion in Q1 2022 compared to $686.9 million in Q1 2021, analysts at Bankless wrote in a report. Activity on Arbitrum and Optimism, two popular layer 2 networks, generated just over $15 million in fees for the Ethereum network.
Layer 2 applications showed some of the strongest growth in the Ethereum ecosystem. (L2Beat)
Layer 2 applications showed some of the strongest growth in the Ethereum ecosystem. (L2Beat)
  • The circulating supply of stablecoins grew 188% to $122 billion, while spot trading volumes on decentralized exchanges exceeded $3.9 trillion in the past year. Much of this came from tether (USDT), whose supply increased from $50 billion to $83 billion, as per CoinGecko.
  • Volumes on decentralized exchanges (DEX), which rely on smart contracts instead of third parties to process user trades, grew 667%. DEX volumes for spot assets increased as much as $3.9 trillion traded over the past year, while futures volumes increased by 2,704% from $7.4 billion to $209.1 billion. Part of these trades came from layer 2-based DEXs, such as dydx and Loopring.
  • However, the number of active addresses interacting with the Ethereum network on a daily basis rose by just 4%. This could imply most existing activity on Ethereum came from prior users instead of new market entrants, some analysts said.
  • "While Ethereum ticked massive growth in the most important aspects, growth was conservative in terms of Daily Active Users which surged by a mere 4%,” said Egor Volotkovich, director at cross-chain solutions tool EVODeFi. “This does not mean users were priced out of Ethereum in Q1 as we saw no significant price surge in the cryptocurrency within this time frame.”
  • Volotkovich explained the lower activity could be attributed to the growing competition around the Ethereum network, such as Terra, BNB Chain and Avalanche.
  • “The number of competitors is notably rising, and rather than stick to Ethereum only, investors are choosing to diversify their portfolio in order to get the best from the growing world of DeFi, NFTs, and Web 3,” he said.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

Read more about