Ark's latest report! Solana is the biggest winner, DEX volume soars, L2 hot war begins.

Lorenzo Valente, Director of Digital Asset Research at ARK Invest, pointed out in their latest analysis report "Big Ideas" on July 28 that there have been significant breakthroughs in the entire on-chain ecosystem over the past year. From the explosive growth in Ethereum L2 volume to Solana's return to the mainstream, there has been a structural shift in overall users and developers, and DEX platforms have also rapidly grown, indicating that on-chain infrastructure is entering a new stage of efficient, large-scale applications. This report reveals the latest trends in the crypto assets market, particularly the rise of Solana and the intense competition between L2s.

1. Ethereum scaling significantly reduces transaction costs, 85% of transactions shift to L2

Valente pointed out that over the past year, Ethereum has undergone a series of technical upgrades that have reduced L2 transaction costs by 10 to 20 times, prompting a large number of users to migrate from the Ethereum mainnet to L2, with over 85% of transactions occurring on L2. He emphasized that this trend continues, and expects that Ethereum will have more upgrades in the future, including raising the Gas limit on the Ethereum mainnet, allowing specific users to freely choose whether to trade on the mainnet or L2.

2. The L2 battleground has begun, exchanges and tech companies compete for the big pie

When it comes to the hottest L2 projects, Valente candidly stated that the biggest L2 narrative over the past year is the L2 scaling chain of an American exchange. He indicated that, in terms of active user numbers, volume, revenue, and other metrics, this chain occupies more than half of the market, even describing it as "sweeping the entire L2 ecosystem." However, he also mentioned that the situation is changing, with more and more exchanges and tech companies starting to join this L2 battle.

3. Other platforms rush into L2, DEX trading volume surges

Valente stated that since mid-2024, many players have been competing to advance to L2. Among them, Robinhood plans to tokenize its assets and products, utilizing the Arbitrum framework to create the "Robinhood Chain." Securitize is also collaborating with Ethena Labs to launch the public chain Converge, which is compatible with the Ethereum Virtual Machine (EVM). Meanwhile, Worldcoin is building its own L2 chain "World Chain" on the Optimism framework.

Valente believes that the entry of these new players will drive quantitative competition among L2s, making users not only switch to L2s because of lower transaction fees, but also due to the increasingly rich applications and functionalities of these platforms.

Valente further pointed out that the usage and market share of DEX have rapidly grown over the past year. At the beginning of 2024, the spot and derivatives trading volume of DEX accounted for approximately 8% and 3% of the overall market, respectively. However, by early 2025, the proportion of spot trading has approached 20%, and recently surged to between 25% and 30%, indicating that DEX trading volume is quickly capturing market share from traditional CEX. He specifically named DEX such as Uniswap, Raydium, Orca, and Aerodrome, stating that their efficiency far exceeds that of CEX. Many DEX teams have fewer than 100 employees, yet they can achieve trading volumes comparable to large exchanges with thousands of employees, demonstrating the enormous potential of DeFi.

Valente also specifically mentioned that a dual-track hybrid model has emerged, where CEXs launch their own L2 projects. For example, a large exchange not only operates a centralized exchange but also supports DApps on its L2. This strategy allows traditional exchanges to grasp both the DeFi and CeFi markets simultaneously. He expects that the trading proportion of DeFi will further increase in the future, especially with new types of DEX like Hyperliquid, which may continue to capture market share.

4. Solana TPS surpasses Ethereum overall, developers flock in

Finally, Valente mentioned that Solana will be the most noteworthy this year. He stated that Solana had dropped to a mere 8 dollars during the bear market, but now its transactions per second (TPS) have reached 800, far exceeding the sum of Ethereum's mainnet and all L2s. Whether looking at volume, revenue, active users, or the number of developers, Solana has officially entered the top three in the industry. According to developer data, the number of new developers on Solana in 2024 has surpassed Ethereum, making it the preferred platform for on-chain innovation, while a well-known L2 chain has also squeezed into the top five in developer activity.

5. Solana new execution layer Fire Dancer and Alpenlow are about to go live

Valente pointed out that the upcoming upgrade of Solana will further strengthen its own layer, and the Solana team is currently actively developing two new technologies:

Fire Dancer: Developed by Jump Crypto, Fire Dancer is the first independent validator client for Solana, written in C++. It has been tested to handle over 1 million transactions per second (TPS), significantly improving network performance and stability while reducing reliance on a single software. Although Firedancer is already running on the mainnet, it has not yet participated in the consensus process and is not fully launched.

Alpenlow: The Solana core development team Anza proposed a new consensus protocol Alpenglow in 2025, aimed at replacing the current TowerBFT and Proof-of-History mechanisms. This upgrade introduces two major modules, "Votor" and "Rotor", significantly accelerating block consensus and data transmission efficiency, allowing the network to achieve transaction confirmation within 100 to 150 milliseconds. For applications that rely heavily on low latency, such as real-time payments, on-chain games, and DePIN, Alpenlow is seen as a disruptive technological breakthrough, expected to gradually launch on the mainnet between 2025 and 2026.

He emphasized that these two technologies will be the core of Solana's greatest technological beliefs.

Conclusion:

The latest report from ARK Investment reveals a structural shift in the Crypto Assets market. The rapid scaling of Ethereum L2 has reduced transaction costs, attracting a large number of users to migrate. At the same time, Solana has become the focus of the market with its astonishing TPS and influx of developers. The surge in DEX volume also indicates the tremendous potential of decentralized finance. These trends are collectively driving on-chain infrastructure towards a new phase of efficiency and large-scale applications.