Total value locked in Ethereum Layer 2 networks has slid back to roughly $5 billion, a level last seen in 2023. This undoes most of the buildup from 2024, when mindshare was focused on the successful launches of L2s like Optimism, Arbitrum, and ZKsync.
Optimistic rollups such as Optimism, Base, and Arbitrum continue to dominate TVL, accounting for $4.8 billion, or 96% of the total.
The retreat in TVL has lined up with a rough stretch for Ethereum, too. The Ethereum Foundation has lost several senior leaders since the start of the year, including co-executive directors and broader foundation layoffs.
Meanwhile, traditional finance, which was expected to validate Ethereum's institutional thesis, has increasingly embraced alternatives alongside Ethereum. Examples include DTCC, which is tokenizing Treasuries against a $100 trillion custody base and JPMorgan, which has brought JPM Coin onchain across multiple public blockchains.
Stablecoins remain the exception. USDC and USDT still settle predominantly on Ethereum and its L2s. This stablecoin base has kept Ethereum central to crypto's TradFi bridge so far, but it's a fine line to hang institutional relevance on, given how much the network commanded a year ago.
This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.