Layer 2 Growth Accelerates While Token Economics Face Headwinds

The Layer 2 ecosystem continues to demonstrate remarkable scaling capabilities, with transaction throughput reaching 5.19 times higher than Ethereum’s main network as of late December 2025. This surge reflects the sector’s growing adoption, supported by approximately 10.18 million active addresses per week across major platforms.

Market Leadership and Capital Distribution

Arbitrum maintains its dominance within the Layer 2 space, commanding a 44% market share alongside $16.7 billion in total value locked (TVL). Base trails closely in second position, capturing a 33% share with $12.5 billion TVL. This concentration highlights how these two networks have become the primary liquidity hubs for Layer 2 applications and users seeking lower-cost transactions compared to Ethereum.

Revenue Generation vs. Token Valuation Disconnect

While Layer 2 networks demonstrate strong operational metrics, the financial performance of native tokens tells a different story. Base exemplifies this gap—despite generating $185,291 in daily revenue, its token continues to struggle in capturing meaningful value. The disconnect stems from two structural issues: transaction fees are predominantly settled in ETH rather than Layer 2 native tokens, and persistent inflationary token emission pressures weigh on price dynamics.

Path to Token Performance Recovery

Market participants anticipate a significant turning point following the adoption of Dynamic Supply Schedules (DSS). This mechanism is designed to tackle inflationary tokenomics by aligning supply issuance with network economics, potentially unlocking better value capture for Layer 2 tokens. Until this transition occurs, token performance is expected to remain constrained despite the impressive transaction throughput and ecosystem growth.