Layer 2 tokens stay underdogs in 2022 because the highlight was stolen by Layer 1 cash, in response to a observe from Kaiko Analysis.
What Occurred: The analysis agency constructed a basket of prime Layer 1 cash (L1) equivalent to Solana (SOL), Terra (LUNA), Cardano (ADA), Avalanche (AVAX) and BNB (BNB).
For the needs of evaluating with Layer 2 (L2) tokens, the researchers made an identical basket with dYdX (DYDX), Loopring (LRC), MetisDAO (METIS), Boba Community (BOBA) and Polygon (CRYPTO: MATIC).
“Layer 2 tokens have struggled and are down over 40% after a very tough February and March,” mentioned Kaiko, in a observe seen by Benzinga.
YTD Returns Of L1s and L2s — Courtesy Kaiko Analysis
Alternatively, L1 cash moved consistent with Ethereum (CRYPTO: ETH) over the 12 months. That is although the second-largest coin by market cap has continued to bleed whole worth locked market share.
Notably, Ethereum’s TVL locked in Decentralized Finance (DeFi) declined from $243.63 million at first of January to $207.90 million on Monday, in response to information from Glassnode.
Chart Monitoring Ethereum Complete Worth Locked Since January 2022 — Courtesy Glassnode
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Why It Issues: Among the L2s tracked by Kaiko have seen vital value erosion for the reason that 12 months started. LRC, MATIC and DYDX, are down 56.9%, 47.5% and 46.9% respectively to date in 2022.
Some L1s, compared, have carried out higher. LUNA is up 4.6% to date in 2022, whereas BNB and AVAX are down 22.2% and 36.4%. Solana has eroded 43.3% in value in the identical interval.
As compared, Ethereum has fallen 20.25% for the reason that 12 months started.
Kaiko mentioned hints originating from the group at Optimism, the fourth-largest L2 by TVL, concerning the launch of a token and comparable exercise from Arbitrum, the second-largest L2 by TVL, might see a potential resurgence of curiosity in L2s.
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