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- Whales have shed their Ethereum Layer 2 token holdings ahead of the Dencun Hard Fork scheduled for Wednesday.
- MATIC, IMX, OP, ARB and MNT prices decline on Tuesday while Ethereum price sustains above $4,000.
- Ethereum Layer 2 tokens could offer a “buy the dip” opportunity ahead of Dencun upgrade, which will lower transaction costs.
Prices of Ethereum Layer 2 tokens are declining sharply on Tuesday, ahead of Ethereum’s Dencun Upgrade lined up for Wednesday. The upgrade is expected to reduce the transaction cost for Layer 2 tokens that scale the Ethereum network.
Polygon (MATIC), ImmutableX (IMX), Optimism (OP), Arbitrum (ARB) and Mantle (MNT) prices dropped between 3% and 5% on the day..
Also read: Ethereum price unlikely to be moved by SEC ETF decision as approval odds diminish, analysts say
Layer 2 tokens bleed
Ethereum is facing criticism from crypto experts for its upcoming upgrade as it focuses on reducing transaction costs for Layer 2 solutions and not the underlying blockchain.
Justin Bons, Founder and CEO of CyberCapital, argues that Ethereum is now “fully committed to mediocrity.” Bons said in a recent tweet on X that the Layer 1 chain has zero plans to scale its underlying blockchain and Ethereum is pushing users to Layer 2 chains instead. The Dencun upgrade has indeed divided the ETH community into supporters and critics.
ETH is now fully committed to mediocrity
— Justin Bons (@Justin_Bons) March 12, 2024
With ZERO L1 scaling plans! Fees will remain high far into the foreseeable future
They gave up on sharding & they are not even trying to parallelize the EVM
Feats competing L1s have accomplished, while ETH pushes users to L2s instead!
The Dencun upgrade is a day away and L2 tokens have noted a sharp decline in their prices.
The drop could be considered a “buy the dip” opportunity for traders waiting to jump in on the narrative of L2 gains following the decline in transaction fees. MATIC, OP, and ARB prices declined 4% in the past 24 hours. IMX price dropped 5% on Binance and MNT yielded nearly 3% losses to holders in the past day.
Some large wallet investors, popularly known as whales, are swapping their L2 tokens for stablecoins or other cryptocurrencies, on-chain data shows.
Spotonchain tracked two large wallet investors’ which recently shed their L2 token holdings. The first wallet, identified as dForcenet, deposited 2.45 million ARB worth $5.05 million to Binance, and the second swapped 1.03 million ARB worth $2.13 million for USDC. Both transactions occurred on Tuesday, likely contributing to the overall decline in L2 token prices.
Ethereum price hit its 2024 high of $4,093 on Binance earlier today. The altcoin has experienced a pullback since then and is exchanging hands at $4,026, at the time of writing.