Ethereum Layer 2 Update: Why Have L2 Token Prices Failed to Grow?

The year 2025 highlighted a clear paradox. While Layer 2 activity on Ethereum exploded and ETH itself reached new all-time highs, the prices of native Layer 2 tokens failed to deliver meaningful growth. Why did this happen, and are L2 native tokens still worth investing in?

1. Overview of the Layer 2 Ecosystem

1.1 Growth and Technical Performance

Looking back over the past few years, Ethereum’s Layer 2 ecosystem has not only grown in scale but has also achieved major technological breakthroughs. This expansion was driven by a well-structured and continuous Ethereum upgrade roadmap.

• Dencun Upgrade (March 2024): This marked the first major turning point with the introduction of data blobs through EIP-4844. The upgrade addressed one of Ethereum’s most persistent pain points: gas fees. Transaction costs dropped sharply, while profit margins for sequencers improved significantly.
• Pectra Upgrade (May 2025): Building on that momentum, Pectra doubled blob capacity via EIP-7691. As a result, Layer 2 transaction costs continued to trend sharply lower, approaching near-zero levels. This effectively removed barriers for retail users and enabled mass adoption scenarios.
• Fusaka Upgrade (December 2025): Most recently, Ethereum implemented PeerDAS through EIP-7892. This upgrade further expanded data throughput and network processing capacity, pushing Ethereum’s scalability to an entirely new level.

These infrastructure upgrades quickly translated into real on-chain metrics:

• Near-total dominance: By November 2025, Layer 2 networks accounted for approximately 95 percent of total transactions per second compared to Ethereum mainnet. Transaction activity has effectively been outsourced to rollups.
• Explosive throughput growth: Average transaction capacity increased exponentially, from around 50 TPS in 2023 to roughly 325 TPS in 2025.
• Capital migration: Beyond transaction counts, real capital followed. More than 37 billion USD in assets are now secured across rollups.
• Price increase : ETH price movements tended to rise either before or shortly after these upgrades, often following a classic “buy the rumor, sell the news” pattern.

1.2 Why Is On-chain Activity Growing While Native Token Prices Are Not?

A fundamental contradiction now defines Ethereum’s ecosystem. While network scale expands rapidly under a rollup-centric roadmap, value accrual has failed to flow back to ETH holders and Layer 2 native token holders as many expected.

One key factor is the sharp decline in Layer 2 “rent extraction.” Layer 2 networks bundle transactions and settle them on Ethereum, reducing fees for users but historically providing a meaningful revenue stream for Ethereum mainnet.

• In 2024, Layer 2 networks generated approximately 277 million USD in total revenue, of which 113 million USD, or 41 percent, was paid to Ethereum for data availability and security.
• In 2025, total Layer 2 revenue dropped by 53 percent to roughly 129.17 million USD, primarily due to lower end-user fees.
• Payments to Ethereum mainnet declined even more sharply, falling to around 10 million USD, representing less than 10 percent of total revenue. The remaining 119 million USD was retained by Layer 2 operators as profit.

The primary driver behind this shift was the Dencun upgrade. While it dramatically reduced transaction costs and allowed Ethereum to scale without congestion or rising fees, it also reduced direct revenue flows from Layer 2 to Ethereum. This removed a critical source of ETH demand, as high fees previously led to more ETH being burned, reducing supply and supporting price.

Additional factors further explain the disconnect. Traditional capital flows increasingly concentrate on Ethereum Layer 1 as the core settlement and security layer. Institutions such as BlackRock and Fidelity prioritize ETH L1 due to its security guarantees, lack of counterparty risk, and dominant position in tokenized assets and stablecoins. Meanwhile, most Layer 2 fees accrue to sequencers rather than native tokens.

In a market environment that favors major assets, Layer 2 tokens suffer from heavy fragmentation and a lack of clear catalysts. ETH benefits from institutional flows, while L2 tokens continue to lag.

With record-low fees in 2025, ETH supply reduction weakened further, pushing ETH inflation up by approximately 0.204 percent since The Merge in 2022, reversing the deflationary trend seen in prior years.

1.3 Trends and Fragmentation Within Layer 2

Market consolidation is accelerating as capital concentrates into a handful of dominant Layer 2 frameworks. Today, Arbitrum Orbit and Optimism Superchain alone support more than 80 active chains. This leaves limited room for alternative frameworks such as zkSync and Starknet to compete for mindshare and users.

Base currently dominates revenue generation with 75.4 million USD, accounting for 62 percent of total Layer 2 revenue. Arbitrum One leads in secured assets, with 16.83 billion USD under protection.

This level of fragmentation has forced underperforming projects such as Pirate Nation and Polygon zkEVM to shut down. Even more telling, companies like Stripe and Circle have chosen to build their own Layer 1s rather than rely on rollups, highlighting the existential challenge facing hundreds of Layer 2s to prove real economic value instead of simply following technical trends.

Looking ahead to 2026, Layer 2 dominance is expected to become nearly absolute, capturing more than 99 percent of transaction share over the long term. However, the price outlook for native Layer 2 tokens may remain similar to 2025. While on-chain activity and usage metrics continue to grow, competition will shift toward a new battlefield. Instead of fighting for retail users, projects will focus on attracting institutional and enterprise capital.

The current hierarchy could also be disrupted by powerful newcomers. Robinhood Chain is expected to bring a massive TradFi user base on-chain, while MegaETH aims to set new performance benchmarks for the entire industry.

2. Updated information on Ethereum’s Major Layer 2s.

2.1 Base

Base has firmly established itself as the leading Layer 2 by generating 75.4 million USD in on-chain revenue, representing 62 percent of total Layer 2 revenue. This dominance is not accidental. It stems from Coinbase’s backing and Base’s ability to solve the distribution problem.

Direct access to Coinbase’s 9.3 million verified users allowed Base to outpace competitors from day one.

Base is no longer focused solely on DeFi through Aerodrome. It is evolving into a broader application platform. AI-related activity is emerging through Virtuals, while betting and lending gain traction via Football.Fun and Morpho. User behavior data shows declining DEX speculation and increased USDC holding and usage for real-world applications.

Base’s 2026 ambition centers on “The Base App,” an everything app integrating a wallet, social networking through Farcaster, NFTs via Zora, and encrypted messaging with XMTP. The goal is to become the WeChat of crypto. In parallel, Base is experimenting with creator economy models through content tokenization, despite a high failure rate.

Base has not yet launched a native token. A potential airdrop remains uncertain, but if a token is introduced, it is likely to reward real usage rather than short-term liquidity farming.

2.2 Arbitrum

Arbitrum continues to dominate in scale, with 17.98 billion USD in DeFi TVS and 8.61 billion USD in stablecoin market cap. It hosts major blue-chip protocols such as Aave and Uniswap, while also incubating native projects like GMX and Hyperliquid.

Arbitrum’s 2026 catalyst is Robinhood Chain, expected to become a Base-equivalent within the Arbitrum ecosystem via Arbitrum Orbit. If successful, it could onboard large-scale traditional users on-chain.

As ARB faces price pressure, ArbitrumDAO is shifting toward a “Digital Sovereign Nation” model. The focus is on sustainable revenue from blockspace fees, Timeboost auctions, and profit sharing from Orbit chains. The potential launch of a native stablecoin in 2026 is viewed as a key move to capture T-bill yield rather than allowing value to accrue to centralized issuers.

2.3 Optimisim

2025 was a difficult year for OP, with the token down more than 85 percent. However, from an infrastructure perspective, Optimism remains a core Layer 2 pillar, with OP Stack powering roughly 62 percent of all Layer 2 transactions.

The Superchain model shows clear concentration. Base accounts for nearly 82 percent of TVL and contributes most of the shared revenue. New chains such as Ink, Soneium, and Unichain remain in early stages and have yet to generate meaningful cash flow.

Ronin’s integration strengthened the gaming segment, but revenue pressure has forced Optimism to adjust its strategy. The renewed focus is on institutional clients and reviving OP Mainnet, where the DAO retains 100 percent of revenue. This represents a pragmatic shift aimed at improving economic competitiveness.

2.4 zkSync

zkSync has gained attention amid rising interest in privacy and zero-knowledge technology. The project positions itself as institutional-grade infrastructure, aiming to build a complete Bank Stack for Ethereum.

Its core technical pillars include the Airbender prover using RISC-V architecture to improve performance and reduce costs, and the Atlas upgrade to optimize finality, a key requirement for traditional finance. zkSync is also developing Prividiums, private validiums designed for large institutions such as Deutsche Bank, combining data privacy with Ethereum security guarantees.

In 2026, zkSync aims to “skip the cold start” through interoperability, enabling new chains to access ETH liquidity immediately. At the same time, it plans to activate a token flywheel by using transaction fees for ZK token buybacks and burns.

2.5 Starknet

Starknet is less accessible than EVM-compatible Layer 2s, but in return offers deep technical foundations and a long-term vision. By choosing Cairo and avoiding zkEVM compatibility, Starknet optimizes performance at the architectural level.

Its core strategy focuses on building a high-performance ZK execution layer, expanding into BTCFi and payments. The ecosystem benefits from bridged BTC flows, lending strategies, and positioning Starknet as a Bitcoin execution layer. In parallel, StarkWare is prioritizing decentralized provers, reducing STARK costs, and increasing staking participation under its 2026 roadmap, which will be critical for competing with next-generation ZK rollups.

3. Conclusion

In summary, 2025 delivered a costly lesson. Explosive Layer 2 technological growth does not automatically translate into token price appreciation. Entering 2026, unless structural changes occur, native Layer 2 token prices may continue to resemble prior years.

The competitive landscape now favors projects with real cash flow like Base, durable infrastructure like Arbitrum, or breakthrough technology such as MegaETH and zkSync. Fragmentation will intensify. Projects must either evolve into profitable on-chain businesses or face elimination.

For investors, allocating capital to Layer 2 native tokens increasingly requires the mindset of a true shareholder, not a short-term speculator, as the next phase of value accrual takes shape.

Disclaimer: This content does not constitute investment, tax, legal, financial, or accounting advice. MEXC provides this information for educational purposes only. Always do your own research, understand the risks, and invest responsibly.