Why Are Layer 2 Tokens Falling Behind? Record Trading Volumes and the Deadlock in Value Capture

Layer 2 network news reveal the most striking paradox of recent times: tremendous success in transaction volume, but disappointment in token value.

The Impressive Transaction Volume Performance of Layer 2 Networks

In measurements up to December 23, 2025, Layer 2 solutions have dramatically outperformed Ethereum. In terms of transaction volume, these networks are processing exactly 5.19 times more transactions than the base layer, Ethereum. This figure demonstrates how effectively Layer 2 technology is progressing in solving scalability issues.

Weekly user activity is around 10.18 million active addresses. This number clearly indicates a vibrant participant base within the ecosystem and the demand pressure on the system.

The Dominant Position of Arbitrum and Base

Two major Layer 2 protocols maintain their market leadership by a wide margin. The Arbitrum ecosystem accounts for 44% of the market share, with a total value locked (TVL) reaching approximately $16.7 billion. The Base protocol follows closely with a 33% market share and a TVL of $12.5 billion.

On the Base network, the daily protocol revenue is around $185,291, but this success is not sufficiently reflected by the token.

Serious Issue in Token Performance: Failure of the Value Capture Mechanism

Beneath the apparent success of the Layer 2 ecosystem lies a concerning problem. The price performance of tokens does not align with the technical development of the networks. Two main factors underpin this misalignment:

First, a significant portion of transaction fees earned by the networks are paid in ETH, the native token of the Ethereum network, and therefore, the value is not directly transferred to the tokens.

Second, ongoing high inflation rates keep the token value dynamics suppressed. A combination of limited value capture and high supply pressure prevents price increases.

The Solution: Implementing Dynamic Supply Schedule Mechanisms

Market expectations suggest that overcoming this serious obstacle is possible through the activation of Dynamic Supply Schedule (DSS) mechanisms. Developers believe that these designs can help mitigate current inflation pressures and reveal the tokens’ true value capture potential.

With the integration of these arrangements into the structure, a turning point in the performance of Layer 2 tokens is anticipated.