Arbitrum Optimism and Base Compete for DeFi Market Dominance

Rising to a total value locked (TVL) of around $52 billion, the distributed finance (DeFi) business has recently expanded spectacularly. Ethereum Layer 2 (L2) solutions, which seek to increase scalability and lower transaction costs on the Ethereum Price network, drive a significant portion of this expansion.

Among the top L2 solutions are Arbitrum, Optimism, and Base—each vying for dominance in this fast-growing sector. Arbitrum has long been the top L2 platform used by TVL, but optimism has lately seen a notable increase in transaction volume and user involvement. Concurrently, Coinbase’s recently introduced Base is becoming a fierce competitor with a flawless connection to its well-known exchange.

Arbitrum’s Dominance Challenges

Arbitrum is currently the largest L2 solution by TVL, boasting approximately $17.15 billion, which accounts for around 40% of the total TVL in the L2 space. Arbitrum’s dominance can be attributed to its early market entry and robust ecosystem. It has become home to several prominent DeFi protocols, including Aave, Uniswap, and GMX, which have contributed significantly to its large TVL.

Despite its dominant position, Arbitrum faces challenges in retaining user engagement. Recent data reveals a 7.5% decline in daily active addresses on Arbitrum. This decline in user activity is concerning, as it suggests that while the platform attracts substantial capital, its ability to maintain a growing user base is in question. While Arbitrum remains the go-to platform for DeFi protocols seeking scalability, it is not immune to the pressures of an increasingly competitive market.

Optimism’s Rising Momentum

Once behind Arbitrum, optimism has taken the stage in recent months. Daily transaction volume and user activity of optimism have exceeded those of Arbitrum, indicating rising acceptance and involvement. Daily transactions and active addresses have witnessed a 47% rise in optimism as of 2025. In contrast, these figures are evidence of the increasing appeal of the platform among developers and DeFi members.

Strategic alliances are the primary reason for the increasing optimism. Its connection with Coinbase, one of the biggest bitcoin exchanges worldwide, is among the most noteworthy. This cooperation brings fresh users to Optimism and other projects and apps on the platform. Furthermore, implementing Safe wallets for Worldcoin has helped optimism by increasing user interaction on the network.

With Optimism’s L0 million, it still lags behind Arbitrum in total TVL, even with its expanding user base. This disparity highlights the continuous difficulty Optimism faces in turning user involvement into significant cash inflows. However, the rising transaction volume and user activity on the platform point to it being somewhat on its way to closing this disparity in the following months.

Base’s Rapid Growth

Base, a new entrant into the L2 space developed by Coinbase, has quickly become a force to be reckoned with. Launched in 2024, Base has seen rapid growth in TVL and user adoption. By mid-2024, BasBase’s L$7.64 billion, placing it just behind Arbitrum as the second-largest L2 platform.

One of the key factors driving BasBase’s success is its deep integration with Coinbase’s system. As one of the world’s largest and most widely used cryptocurrency exchanges, Coinbase has given Base a significant advantage in user acquisition. This has enabled Base to attract millions of users, many of whom are already familiar with Coinbase’s platform. Base’s implementation of Ethereum’s upgrade, which introduced proto-danksharding, has drastically reduced gas fees and improved transaction speed, making it an attractive option for developers and users.

BasBase’s success is fueled by its rapidly expanding user base. By December 2024, Base had attracted over 15 million “super users” who had conducted 100 or more transactions on the platform. This number surpasses Ethereum and other L2 solutions, demonstrating that Base quickly becomes a preferred destination for high-volume DeFi users.

L2 Solutions Competition

As of 2025, the combined TVL of Arbitrum, Optimism, and Base exceeds $52 billion, solidifying the critical role that L2 solutions play in the DeFi ecosystem. These platforms are essential in providing scalability, lower transaction fees, and faster transaction speeds, all of which are crucial for the continued growth of DeFi. Each platform has unique strengths: Arbitrum’s established TVL, Optimism’s increasing partnerships, and Baseline’s rapid growth.

Despite their strengths, the competition among these platforms is intensifying. Each L2 solution vies for a larger share of the DeFi pie, and their strategies will determine their future success. Arbitrum may be the current leader of TVL, but its challenges in user engagement highlight the need for continuous innovation. Optimism’s user base demonstrates the importance of strategic partnerships and community involvement. Meanwhile, BasBase’s value lies in seamless integration with large-scale platforms like Coinbase.

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