Original Title: "zkSync earns over 20 million US dollars in silence for half a year, how does Layer 2 profit?"

Original Source: "Blockchain in Plain Language"

This year, Ethereum Layer 2 has experienced explosive growth, just like the previous public chain boom. A large number of project parties have started to lay out the Layer 2 track, whether they have jujube or not, they first hit a pole. Recently, some people believe that due to the Token distribution expectations of Layer 2, many studios have become anti-fur objects. By earning Token distribution and handling fees, Layer 2 project parties have become the biggest winners in this fur game.

According to analysis by The Block, Coinbase can earn an annual profit of $61 million from the Base network based on current daily profits, surpassing other public chain platforms or DAPP applications in the industry. Today, let's take a brief look at how Layer 2 project parties, specifically Rollup solutions, make profits.

Layer2 is How to Profit

Layer2 refers to the extension technologies and protocols built on top of the blockchain, aimed at improving the scalability, performance, and transaction throughput of the blockchain. Traditional blockchains (such as Ethereum) have some limitations, such as high transaction fees, low throughput, and long confirmation times. Layer2 typically introduces new protocols and mechanisms on top of the blockchain, allowing a large number of transactions to be processed in auxiliary networks before leaving the main blockchain. The results of these transactions are aggregated and submitted to the main blockchain, reducing the burden on the main blockchain and achieving higher throughput, lower costs, and faster confirmation speeds, while maintaining security and interoperability with the main blockchain.

As a practitioner in the encryption industry, I can translate the Chinese text to English without considering the context or industry-specific terms and phrases. English words and phrases, as well as capitalized English words and phrases, should not be translated or omitted, such as ZKS, STARK, and SCROLL. If there are English characters in the hyperlink, they should be returned directly without translation, and the hyperlink should not be missed. When there are only punctuation marks in the content, the punctuation marks should be returned as they are. HTML tags in the content, such as

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Layer2 is a popular track nowadays and has been highly anticipated by many people. In the current bear market environment, can you still make money by doing Layer2? How exactly can you achieve this?

(1) Transaction Fees

Layer 2 platforms can generate profits by collecting transaction fees from users. When users conduct transactions on Layer 2, they need to pay a certain amount of fees, which can flow directly or indirectly to the maintainers or node operators of the Layer 2 platform. The platform can set different fee structures, such as transaction-based or value-based fee models, to generate revenue.

Let's first take a look at the composition of Layer 2 transaction fees:

Calculation fee: The fee required for executing smart contracts or computing operations on Layer 2 chains. This includes executing contract code, computing state transitions, and other operations.

Storage Fee: Layer 2 involves storing user data. In this case, users need to pay storage fees to cover the cost of data storage and management. Storage fees may vary depending on the amount of data stored, storage time, and data complexity.

Main chain transaction fees: The cost of submitting transaction results from the Rollup chain to the main chain. This includes the cost of submitting information such as the hash value of aggregated transactions or state updates to the main chain for verification and storage. A small number of transactions are also required on the main chain to support the operation and security of the Rollup chain, which may involve operations such as opening, closing, and updating the state of the Rollup chain, and therefore require payment of transaction fees related to the main chain.

The profit obtained by the project party = Layer 2 gas - data calculation and storage costs - Layer 1 verification costs.

This is just a rough calculation, and some trading hardware facilities, node maintenance, and labor costs are not included.

（2）MEV

Layer 2 separates transaction verification and Sequencer (transaction submission sorting) into two parts. Currently, the vast majority of Layer 2 Sequencers are centralized and mostly controlled by project parties, such as Base. Coinbase is the only Sequencer for Base, which allows Coinbase to profit from all gas profits. Due to the centralization of Sequencers, some MEV (maximum extractable value) is also earned by Layer 2 project parties.

（3）Developer Tools and Services

Layer 2 platforms provide various developer tools and services to offer convenience and support to developers. These tools and services may include software development kits (SDKs), smart contract templates, cross-chain bridging, and more. The platform may generate revenue by charging developers for licensing, usage, or subscription fees for advanced features.

For example, OP Stack. Twitter KOL w3tester revealed that the cost for each project to enter OP Stack is 30% of revenue, and it will be even more expensive if the one-click chain project is used. This also means that if the operation is not proper, it cannot guarantee enough trading volume, and one-click release of Layer2 may also lose money.

（4）Ecological Benefits

The success of Layer 2 platforms is closely related to the prosperity of their ecosystems. If the platform can attract more users and projects to join, and provide them with better scalability and user experience, this will help increase the value of the entire ecosystem. The platform can benefit from the appreciation of the ecosystem through token holding, equity, or other means. In addition, the prosperity of the ecosystem will also bring a lot of popularity and activity to Layer 2, and Layer 2 can also earn revenue from gas fees.

（5）Token Economic Model

Layer 2 platforms issue their own Tokens, and Token holders can earn profits by participating in platform governance, staking Tokens, or enjoying other benefits. Layer 2 platforms can raise funds through equity or Token sales. If the market booms and the relevant track explodes, the appreciation of Tokens will also bring considerable profits to Layer 2 project parties.

Above is the main profit model of Layer 2 project parties.

Head Layer 2 Profit Status on the Chain

Head Layer 2 on-chain profit and loss statement

Let's take a brief look at the profit situation of various Layer 2 solutions in the head section in August. Here, profit mainly refers to the transaction fees collected, and L2 revenue = L2 transaction fees - L1 data storage costs - L1 verification costs. This can only be considered an approximate calculation, as the off-chain resource consumption and operation costs of Layer 2 have not been taken into account:

zkSync

Approximately 3.4 million US dollars can be seen that since zkSync went online, its profitability has always been at the forefront. If other project parties carry out short selling, zkSync's income will also experience a wave of growth. As of now, half a year since the mainnet went live, the total profit is about 23.5 million US dollars. It can be confirmed that most of zkSync's income comes from the contribution of "wool shearing party". When this number was calculated, it was really surprising that even in such a bad market this year, they could still make so much money. With top institutions supporting and leading the race, making money is too easy.

BASE

Approximately 2.1 million US dollars. BASE was just launched at the end of last month. The huge traffic owned by the Coinbase platform itself, plus the short-term outbreak of the BALD project, brought a lot of traffic to BASE. Although the BALD project eventually RUG, it still left a large number of users for BASE. In addition, the recent strong rise of the social application Friend and the entry of Twitter KOLs have continued to bring popularity to BASE. In less than two weeks, Friend has already obtained a total lock-up value (TVL) of 6 million US dollars, achieved revenue of 3 million US dollars, and attracted more than 100,000 users.

Arbitrum

Approximately $930,000 USD, the recent popularity of Arbitrum has declined. In March and April, when the Arbitrum Token was just launched, the on-chain ecosystem was boosted by the outstanding performance of projects such as GMX, RDNT, and GNS, leading to an increase in popularity and on-chain activity at that time.

Optimism

Approximately $800,000 USD, the Optimism ecosystem has been in a steady state of development. The rise of the Arbitrum ecosystem in March and April has brought attention from some on-chain players to Optimism, which is also in the OP track. Recently, projects such as Coinbase, BNB Chain, and Worldcoin have chosen to launch on the OP stack, which has also benefited the Optimism ecosystem, resulting in a slight increase in on-chain activity.

As mentioned above, the revenue of Layer 2 mainly comes from gas fees. The more people use it, the more revenue it generates. When popular ecological projects emerge or there are potential benefits, the project earns more.

Summary

Regardless of the track, there are profits and losses. It may be relatively easier to make profits in a favorable environment, but if you want to earn more, you must become a leader. The vast majority of projects are just followers, and profits will always belong to the minority.

Overall, if Layer 2 wants to develop better, it needs to occupy a larger market share. At the same time, the ecosystem needs popular projects to appear in order to bring activity to it.

About the profitability status of various top Layer2 projects in the bear market, what is your opinion? Welcome to discuss in the comments section.

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