Despite a quiet Q3 for crypto, #Ethereum L2s accounted for 61% of all Ethereum transactions.

This shows that users are turning to L2s for faster, cheaper, and more scalable transactions, according to Messari.

Ethereum L2 (Layer 2) solutions are scaling solutions built on top of the Ethereum blockchain. They aim to address the scalability limitations of the Ethereum network, which can be slow and expensive due to high transaction fees and network congestion.

Layer 2 solutions work by processing transactions off-chain, meaning that transactions are settled on secondary networks or protocols but still ultimately secured by the Ethereum mainnet. This allows for faster and cheaper transactions while leveraging the security and decentralization of the Ethereum network.

There are several notable Ethereum Layer 2 solutions, each with its own approach and features. Here are a few of the most successful ones:

1. Optimistic Rollups: Optimistic Rollups are Layer 2 solutions that bundle multiple transactions into a single batch and submit them to the Ethereum mainnet. They use fraud proofs to ensure the validity of transactions, enabling faster and cheaper transactions without sacrificing security. Optimism and Arbitrum are two well-known projects working on Optimistic Rollups.

2. zkRollups: zkRollups (Zero-Knowledge Rollups) also bundle multiple transactions into a single proof and submit it to the Ethereum mainnet. However, zkRollups use zero-knowledge proofs to compress transaction data and validate it on-chain, providing scalability and privacy. Loopring and StarkWare are notable projects working on zkRollup solutions.

3. Plasma: Plasma is a Layer 2 framework that allows for the creation of sidechains, which are separate chains that can process transactions independently while periodically committing the final state to the Ethereum mainnet. Plasma chains can handle a high volume of transactions, improving scalability. OmiseGo and Matic Network have developed Plasma-based solutions.

4. State Channels: State channels are Layer 2 solutions that enable off-chain transactions between participants. They establish a temporary channel off-chain, where participants can execute multiple transactions instantly and only settle the final outcome on the Ethereum mainnet. The Raiden Network is a well-known project working on state channel solutions.

It's important to note that the success of Layer 2 solutions is still evolving, and the Ethereum ecosystem continues to explore and develop various approaches to address scalability challenges. The most successful solutions may vary over time as they undergo further development, adoption, and refinement.