Ethereum layer-2 networks have gone through an explosive growth phase over the past couple of months, a trend that is set to continue in 2023.
According to recent data, the leading layer-2 networks have seen an increase in daily active users thathas translated into a growth in fees for the respective ecosystems.
According to analytics provider Token Terminal, Polygon leads the pack with 313,457 daily active users as of Jan. 17, a metric that spiked to over 600,000 daily active users earlier in January.
That’s a 30% increase in activity since the beginning of October, resulting in nearly $55,000 worth of daily fees for Polygon.
Optimism has seen even faster growth, with a 190% gain in daily active users over the past three months. This resulted in daily network fees of $119,475, a gain of almost 140% since the beginning of the year.
Arbitrum One currently has 41,694 daily active users, an increase of around 40% over the past three months. Daily fees on the network are just over $40,000, according to the data.
Meanwhile, L2 ecosystem analytics platform L2beat states that Arbitrum has a market share of 52% in terms of total value locked (TVL), which is currently at $2.55 billion. Aribtrum has seen a 9% increase in TVL over the past week.
Optimism, the second-largest L2 network, has a TVL of $1.46 billion, giving it a market share of 30%. Its collateral locked has surged by 15% over the past seven days.
The two together account for more than 80% of all the collateral locked in layer-2 platforms.
There has been an increase of almost 10% in TVL for all L2s over the past week, pushing the total TVL up to $4.89 billion. However, that figure is still down 34% since its peak in April.
Nevertheless, this decline is less than half of the retreat DeFi TVL has made since its all-time high. DeFi collateral has declined by 75% since December 2021, according to DeFiLlama, suggesting that there is greater demand and momentum for layer-2 networks at the moment.
The United States Financial Crimes Enforcement Network (FinCEN) — a bureau of the Treasury Department — has argued that Binance is linked to the illegal cryptocurrency platform Bitzlato.
In an order published on Jan. 18, FinCEN stated that the Binance cryptocurrency exchange was among the “top three receiving counterparties” of Bitzlato in terms of Bitcoin transactions.
According to the authority, Binance was among the biggest counterparties that received Bitcoin from Bitzlato between May 2018 and September 2022. Other counterparties included Russia-connected darknet market Hydra and the alleged Russia-based Ponzi scheme known as “Finiko,” FinCEN noted.
On the other hand, FinCEN did not mention Binance as the top three sending counterparties in the order. According to the document, the biggest Bitcoin senders to Bitzlato between May 2018 and September 2022 were Hydra, Finland-based exchange LocalBitcoins and Finiko.
“Approximately two-thirds of Bitzlato’s top receiving and sending counterparties are associated with darknet markets or scams,” FinCEN wrote in the order. The agency noted that between 2019 and 2021, Bitzlato received crypto worth $206 million from darknet markets, $224 million from scams, and $9 million from ransomware attackers.
The news comes amid multiple U.S. authorities initiating major enforcement action against Bitzlato, accusing the firm of money laundering and allegedly facilitating circumvention of sanctions against Russia. As part of the case against Bitzlato, the Federal Bureau of Investigation arrested Bitzlato founder Anatoly Legkodymov on Jan. 17 in Miami.
Unlike major crypto exchanges like Binance or Coinbase, Bitzlato was a little-known cryptocurrency service. Founded in 2016, the platform reportedly has an office in the Federation Tower skyscraper in Moscow, where it accepted transactions of $100,000 or more.
The alleged involvement of Binance in Bitzlato’s case raises some concerns about the exchange’s operations and potential ties with Russia. As previously reported, Binance was among exchanges that opted to continue to serve non-sanctioned Russians after the European Union adopted the eighth sanctions package against the country.
Addressing Cointelegraph’s request for comment regarding FinCEN’s reference to Binance in Bitzlato’s case, a spokesperson for Binance said that the firm has been collaborating with regulators, stating:
“Binance is pleased to have provided substantial assistance to international law enforcement partners in support of this investigation. This exemplifies Binance’s commitment to working collaboratively with law enforcement partners worldwide.“
FinCEN did not immediately respond to Cointelegraph’s request for comment.
Switzerland is a “pivot point” for crypto adoption in Europe and continues to be the “center point of the next stage of institutionalization,” said Dr. Dirk Klee, CEO of Bitcoin Suisse.
Klee divulged why Switzerland is still the top spot for crypto in Europe and will continue to attract institutional investors in an exclusive Cointelegraph interview in Davos, Switzerland.
In discussion with Cointelegraph reporter Gareth Jenkinson, Klee explained:
“A lot of trust has been destroyed and eroded in the last year and we want to be kind of the center point of the next stage of institutionalization, making the place more accessible, easier to use, but also safer.”
Founded in 2013, Bitcoin Suisse is one of the oldest Bitcoin and crypto companies specializing in asset storage, including “custody solutions deep in the Swiss mountains,” stated Klee.
Switzerland is a well-known safe haven for crypto in Europe. The landlocked country is recognized for its role in the inception of Ethereum and is home to Crypto Valley — a favorable environment for blockchain and cryptocurrency companies.
Switzerland also boasts the Bitcoin and crypto-friendly city of Lugano, which hosts an annual Bitcoin conference and has even onboarded McDonald’s into accepting Bitcoin Lightning payments.
However, even in Switzerland, crypto confidence took a knock in 2022, particularly in light of the FTX debacle and its contagion effects across the industry: “It’s a setback for the industry. It has destroyed a lot of trust and has also left a lot of investors harmed,” Klee explained.
In such an environment, it’s helpful to hark back to historic Swiss values. Switzerland is still a “safe safe place to do business."
“The Swiss finish, the Swiss quality is a narrative and is a quality sign that this industry needs because you need to have a trusted place.”
Thousands of crypto enthusiasts have flocked to the crypto and blockchain events at the World Economic Forum. Hosted at the seat of the Alps, in the Davos ski resort, it appears the overarching bear market has not disturbed the Swiss charm.
This Daily Dose was brought to you by Cointelegraph.