Most Ethereum L2s May Not Survive 2026 as Base, Arbitrum, Optimism Tighten Grip: 21Shares

Most Ethereum scaling networks are unlikely to make it by 2026, in response to new forecasts from 21Shares.

The agency’s newest State of Crypto outlook warns that the Layer-2 ecosystem has reached a breaking level after two years of speedy growth, leaving solely a handful of dominant gamers with significant traction.

Base, Arbitrum, Optimism Dominate as Dozens of Ethereum L2s Become ‘Zombie Chains’

More than 50 L2s presently compete for customers, liquidity, and builders. However, by late 2025, market share had already consolidated round three networks, together with Base, Arbitrum, and Optimism, which collectively processed practically 90% of all L2 transactions, with Base alone surpassing 60%.

The remainder of the sector is slipping into irrelevance. Activity throughout smaller rollups has fallen sharply, with L2 utilization down 61% since June, the report reveals.

Many are actually working as so-called “zombie chains,” working with minimal consumer exercise and evaporating liquidity.

Several tasks have already failed. Kinto shut down entirely, Loopring closed its wallet service, and Blast’s complete worth locked collapsed 97%.

Even main DeFi protocols such as Aave and Synthetix scaled again their deployments on weaker L2s, citing poor liquidity and restricted returns.

Layer 2s

Layer 2s are mainly like a supporting chains, and they’re most occasions created to resolve the issue of the mum or dad blockchain and scale back community congestion on the mum or dad chain

Example of layer 2s:

– Base ETH
– Arbitruim
– Polygon
– Optimism
– Starknet

Learn & study

— Angie_Web3 (@Angielle001) October 27, 2025

The Dencun improve’s 90% payment discount triggered aggressive payment wars that pushed most rollups into losses. Base was the one L2 that turned a revenue in 2025, incomes round $55 million.

21Shares expects a “leaner, extra resilient” set of networks to outline Ethereum’s scaling layer by the tip of 2026.

ETH-aligned designs like Linea, which redirect charges again to Ethereum by burns or validator rewards, purpose to enhance long-term sustainability.

Meanwhile, high-performance entrants such as MegaETH are focusing on near-real-time execution to shut the hole with quick monolithic chains.

Exchange-backed networks are additionally reshaping the panorama. Coinbase’s Base and Binance’s BNB Chain confirmed how centralized platforms can onboard thousands and thousands straight onchain, whereas Bybit’s Mantle and Kraken’s Ink are anticipated to observe.

$1T Stablecoins, $400B ETPs, and the Rise of AI-Driven Finance

Beyond Ethereum’s scaling shakeout, 21Shares factors to a sequence of structural shifts which are prone to reshape the digital asset panorama in 2026.

Stablecoins are on monitor to achieve $1 trillion in circulation as they proceed to achieve floor in funds, remittances, and company finance.

At the identical time, international crypto ETPs are anticipated to surpass $400 billion in property, placing them in the identical league as main fairness index funds as institutional entry broadens, per the report.

Decentralized finance can also be set for a resurgence. The agency tasks that DeFi’s complete worth locked will climb previous $300 billion, helped by falling rates of interest, rising stablecoin liquidity, and firms deploying idle treasury property into onchain markets.

Prediction markets, one of many fastest-growing sectors of 2025, could cross $100 billion in annual buying and selling quantity as political uncertainty and macro volatility gasoline demand for real-time occasion hypothesis, 21Shares mentioned.

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