Analysts Highlight Decline of L2 Networks in Ethereum

Research indicates that the number of Ethereum Layer 2 solutions with total value secured (TVS) exceeding $100,000 has decreased from 108 to 100 since June 2025, despite several new protocols being launched. This trend was highlighted by analysts at growthepie.

Over the past ten months, 21 projects have ceased operations, including notable names like Katana, Lasernet, and Immutable X. This consolidation reflects a significant reduction in older Layer 2 networks, even as new ones emerge.

Analysts noted, “There is a consolidation of Layer 2 networks. […] While new L2s are being deployed, we are witnessing a significant reduction in the number of older protocols.”

In addition, the Ethereum application sector is experiencing a slowdown, with active applications dropping from a peak of 639 to 490 currently. Despite this decline, activity within decentralized applications (dapps) has reportedly surged as key players strengthen their market positions.

Experts suggest that this consolidation is a natural part of the ecosystem's evolution, predicting that it may be the first of many phases. Overall, Ethereum's on-chain activity is showing signs of recovery after a slump last autumn, with daily transactions peaking at 2.6 million on March 18, and the number of unique wallets nearing 400 million.

In a related development, Ethereum co-founder Vitalik Buterin expressed that the foundational concept of Layer 2 solutions is becoming outdated, advocating for a new model to guide the ecosystem's future growth.