Most Ethereum L2s Are Already Dying — Here’s Why
From The Optimism Show by Kris Gligoroski & Vittorio Cappelli
December 22, 2025 · 2 min · Season 1 · Episode 94
About this episode
The episode discusses the challenges facing Ethereum Layer 2 networks and predicts a consolidation in the ecosystem by 2026.
A new 21Shares outlook is sounding the alarm: most Ethereum Layer 2 networks may not survive past 2026 as activity, liquidity, and developers continue to concentrate around a small group of dominant chains. After two years of rapid expansion, the L2 ecosystem is hitting a breaking point. While more than 50 Layer 2s are live today, nearly 90% of L2 transactions are already concentrated on just Base, Arbitrum, and Optimism — with Base alone processing over 60% . According to the report, usage across weaker L2s is down 61% since mid-2025 , turning many into so-called “zombie chains.” Several retrenchments highlight the trend: Kinto shut down , Loopring closed its wallet , and Blast’s TVL collapsed by over 90% . Even major DeFi protocols like Aave and Synthetix have scaled back deployments on underperforming L2s due to low liquidity and weak returns. A key catalyst was Ethereum’s Dencun upgrade , which cut data costs by roughly 90% . While great for users, it triggered intense fee competition that pushed most rollups into losses. Base was the only L2 to generate positive revenue in 2025 , reportedly earning around $55 million . Looking ahead, 21Shares expects a much leaner L2…
People in this episode
Hosts: Kris Gligoroski, Vittorio Cappelli
Topics covered
- Ethereum Layer 2
- cryptocurrency
- DeFi
- blockchain technology
- market trends
- financial outlook
Keywords
- Ethereum
- Layer 2
- 21Shares
- Base
- Arbitrum
- Optimism
- DeFi
- zombie chains
- Dencun upgrade
- cryptocurrency market
Mentioned in this episode
Organizations: 21Shares, Ethereum, Base, Arbitrum, Optimism, Kinto, Loopring, Blast, Aave, Synthetix
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