Liquidity or Bust: Why DEX Volume Determines the Fate of Your Layer 2 Solution

Being honest with ourselves, the one thing we are not lacking in Web3 is blockspace. The VC model in previous crypto cycles has often prioritized infrastructure—launching networks, producing blocks, and cashing in on token floats—rather than solving end-user problems. This strategy has resulted in an oversupply of blockspace, with countless Layer 2 (L2) solutions failing to deliver meaningful user activity.

Amidst this glut, one metric stands out as the ultimate decider of a Layer 2’s success: DEX volume. While partnerships, flashy features, and marketing campaigns may grab attention, the real story is told by the liquidity flowing through decentralized exchanges (DEXes). DEX volume is the heartbeat of a thriving L2 network—without it, even the most technically advanced L2 risks becoming a ghost chain, fading into irrelevance.

In today’s crowded L2 ecosystem, projects compete for attention like merchants in a bustling marketplace. But only those with consistent DEX volume truly prove their vitality. Liquidity is the lifeblood that separates the contenders from the pretenders, driving real user engagement, trader interest, and network sustainability.

Let’s dive into the data and examine how different L2 networks stack up, based on the most important metric of all: DEX volume.

Tiering the L2 Ecosystem: Diving into DEX Volume Data

Liquidity isn’t just another metric; it’s the foundation that keeps any Layer 2 network alive. Just as blood circulates through our bodies to sustain life, liquidity flows through DEXes to fuel blockchain ecosystems. Without robust DEX activity, an L2 network struggles to maintain relevance and attract the interest of traders, developers, and liquidity providers.

Thanks to the transparency of blockchain technology, we have access to a wealth of data. Uniswap’s analytics provide a great lens through which to assess DEX activity and, by extension, the health of Layer 2 solutions. Here’s a snapshot of how L2s are currently performing, ranked by their total 24-hour DEX volume for USD/ETH (or similar) pairs:

A-Tier: The Established Powerhouses

Arbitrum (Uniswap V3): $91.5 million Arbitrum leads the pack, with an enormous 24-hour DEX volume, solidifying its status as the dominant Layer 2 solution. This level of liquidity makes Arbitrum a key hub for traders and DeFi projects, attracting both liquidity providers and developers alike.

Base (Uniswap V3): $41.7 million Base is gaining serious momentum, positioning itself as a rising star in the L2 space. With an impressive 24-hour DEX volume, Base shows significant promise in growing its ecosystem and becoming a top competitor. Coinbase is investing heavily in its premier L2 solution.

B-Tier: Solid Contenders

Note: Actually, neither Sui nor TON are considered L2s, but they're mentioned because their volume is respectable.

Sui (Cetus): $15.96 million This past quarter saw Sui breakout and is now showing strong potential, driven by innovative DeFi projects and competitive DEX activity on Cetus. While not in the top tier, it’s proving it can attract meaningful liquidity and trader activity.

TON (DeDust): $15.35 million TON, powered by DeDust, has carved out a niche with a solid DEX volume. Its ecosystem is still growing, but it’s proving to be a noteworthy contender in the race for dex activity.

Blast (Thruster): $13.65 million Few blockchain projects have seen as much of a marketing push as Blast, and it has paid off with impressive short-term volume on Thruster. While its long-term sustainability remains to be seen, it’s currently driving significant activity, giving it a spot among the contenders.

C-Tier: Staying Alive

Linea (Lynex): $5.38 million Linea is showing signs of life, with Lynex providing a platform for steady DEX activity. While it lags behind the larger networks, it’s holding its own and staying relevant in a competitive market.

Polygon (Uniswap V3): $5 million Polygon is a steady performer, with consistent but modest DEX volume. It remains a strong competitor in the L2 space but will need to push harder to regain its former momentum and climb higher in the rankings.

Optimism (Uniswap V3): $3.9 million Optimism continues to show potential, but it's DEX volume suggests room for growth. As it works on expanding its ecosystem, a boost in liquidity and trader engagement could help elevate it to the next tier.

D-Tier: Flash in the Pan / Ghost Chains

Many Layer 2 solutions fail to attract liquidity and fade into irrelevance. Chains like Astar ($485,498), Manta ($230,970), and others fall into this category, struggling to generate more than minimal DEX volume. These "ghost chains" serve as cautionary tales of what happens when L2 networks fail to attract meaningful user activity or liquidity. Out of over 200+ chains analyzed, many are little more than digital wastelands with unused blockspace and wasted potential.

Innovation Through Experimentation: The Wildcards

While DEX volume is a critical metric for determining the success of a Layer 2 (L2) solution, innovation often comes from unexpected places. New L2s create opportunities for experimentation, and sometimes these projects bootstrap ecosystems that punch far above their weight. These "wildcards" demonstrate that unique approaches, thoughtful product-market fit, and strong communities can spark significant activity and reshape the landscape, even in nascent or underutilized networks.

GMX on Arbitrum: Capturing the Degen Trader Community

GMX has become one of the crown jewels of Arbitrum, helping to bootstrap the rapid growth of its ecosystem. GMX captured the attention of Degen traders—those risk-hungry traders seeking high rewards in leveraged trading. By offering a decentralized, low-fee perpetual futures trading platform, GMX tapped into an underserved niche in DeFi.

GMX’s success didn’t happen overnight, but its innovative tokenomics and unique fee-sharing model made it highly attractive to both traders and liquidity providers. GMX allows users to trade directly from their wallets with up to 50x leverage, something traditional DeFi platforms didn’t offer at the time. Liquidity providers (LPs) earn a share of the fees generated by these trades, creating a flywheel effect of liquidity and trading volume.

GMX’s GLP token (a liquidity token representing a basket of assets) has also been a key driver of liquidity. Users can provide liquidity to the platform by minting GLP, which gives them a stake in the platform's success. This alignment between the protocol, traders, and liquidity providers has created a thriving ecosystem where traders are active, liquidity is deep, and volume keeps growing. GMX is a prime example of how a well-targeted, innovative product can become a network catalyst, driving both adoption and liquidity in Arbitrum's ecosystem.

Aerodrome on Base: Rapid Success with Strategic Partnerships

Aerodrome, a new protocol built on Base, has proven that new Layer 2 solutions can compete at the highest levels with the right product offering and strategic partnerships. Aerodrome recently posted a staggering $213 million in 24-hour volume on its WETH/USDC pair, making it one of the top-performing DEXs across all L2s in just a short period.

What sets Aerodrome apart is its ability to capture attention quickly, aided by Base’s close association with Coinbase and a robust DeFi framework. Aerodrome isn’t just riding the hype of being built on a new L2; it’s offering traders highly competitive liquidity incentives and yield farming opportunities that make it attractive for liquidity providers. The DEX capitalized on the Base network’s early success and strong backing, positioning itself as the go-to venue for trading on the Base ecosystem.

Moreover, Aerodrome's user-friendly interface and quick transaction speeds on Base give it a significant edge in attracting both experienced DeFi users and newcomers looking for efficient trading solutions. The project’s growth suggests that user incentives and a well-executed launch strategy can rapidly bootstrap an ecosystem, driving both volume and liquidity.

Solana's Orca: Innovating Beyond Traditional DeFi Strongholds

While not an L2, Orca on Solana deserves a mention for its ability to punch above its weight class in the highly competitive DeFi landscape. Despite Solana not being traditionally seen as a DeFi stronghold compared to Ethereum or Arbitrum, Orca has consistently drawn high volumes, recently posting $113 million in 24-hour volume on the SOL/USDC pair.

What makes Orca stand out is its simple, intuitive user experience. Orca has prioritized accessibility, branding itself as the “easiest DEX to use on Solana,” which has attracted a broader range of users. Orca’s low fees and near-instant transaction times (thanks to Solana’s high throughput) further enhance its appeal, allowing it to thrive even in a space dominated by Ethereum-based DEXes.

Additionally, Orca has positioned itself as a leader in community-driven development, launching features that resonate with its user base, such as Aquafarms—yield farms that reward users with more than just trading fees. Orca’s success demonstrates that building for ease of use, while maintaining competitive DeFi incentives, can drive significant volume even on networks that aren’t considered traditional DeFi powerhouses.

Why These Projects Matter:

The success of GMX, Aerodrome, and Orca illustrates that while liquidity remains king, innovation and unique value propositions can be critical for driving growth in the DeFi space. Each of these projects identified specific market needs and tailored their products to meet those demands—whether it’s leveraging a specific type of trader, aligning liquidity incentives, or simplifying the user experience.

Their ability to rapidly bootstrap ecosystems, create liquidity flywheels, and generate significant DEX volume shows that the market rewards projects that think outside the box. These examples also prove that smaller or newer ecosystems can compete with the giants if they offer something truly differentiated.

As the Layer 2 ecosystem evolves, these wildcards could shape the next generation of DeFi growth, pushing even the most dominant L2s to innovate further or risk losing ground to more agile competitors.

The message is here clear: Liquidity is king. Without real DEX volume, even the most promising Layer 2 solutions are destined to become ghost chains. But as we've seen with GMX, Aerodrome, and Solana’s Orca, innovative projects can rapidly bootstrap ecosystems and drive liquidity, even in emerging or smaller environments.

For L2 developers and investors, the focus must be on DEX volume and liquidity. Keep an eye on those flying under the radar—they could be the breakout success stories of tomorrow.