A recent market report produced by 21Shares warns that the survival of L2 on Ethereum is unlikely for the vast majority of current networks by 2026. The analysis suggests that only consolidated giants like Base, Arbitrum, and Optimism are positioned to endure, while the rest face almost certain extinction.
Currently, more than 50 layer-two solutions compete fiercely to capture the attention of users, liquidity, and developers in a saturated environment. However, data reveals that the market has drastically consolidated into three main networks that process almost 90% of all transactions. Base indisputably leads this select group surpassing 60% of total activity, which leaves minimal operating margins for other emerging competitors.
On the other hand, the rest of the field is slipping dangerously into irrelevance, transforming into what analysts technically term “zombie chains.” Activity on these smaller rollups has fallen 61% since June, causing them to operate with minimal user activity and evaporating liquidity. Projects like Kinto have already closed permanently, while the total value locked in Blast collapsed dramatically by 97% recently.
Furthermore, the Dencun upgrade reduced operating fees, but triggered aggressive price wars that pushed many rollups into financial losses. In fact, Base was the only L2 that managed to obtain net profits in 2025, generating approximately 55 million dollars. This unsustainable financial scenario for the majority suggests an imminent purge of inefficient protocols that fail to justify their economic existence before the cycle ends.
What factors will determine which networks manage to avoid imminent technological extinction?
A much leaner and more resilient set of networks is expected, defined by aligned designs that redirect fees through strategic burns. Likewise, high-performance entrants like MegaETH seek near real-time execution to close the gap with monolithic chains. Exchange-backed networks demonstrate how centralized platforms can onboard millions of users directly to the blockchain, redefining mass adoption.
Beyond the shakeout in the scaling sector, massive structural shifts are projected that will redefine the digital asset landscape. Stablecoins are on track to reach 1 trillion in circulation, while crypto ETPs could surpass 400 billion in assets under management. Finally, the decentralized finance sector will rebound with a locked value of 300 billion, driven by low interest rates.
