Layer 2 of Ethereum Redefines Strategy After Drop in Active Users

Ethereum Layer 2 networks are facing a critical repositioning moment. Data reveals a significant contraction in the user base, with the number of active users dropping from approximately 58 million to around 30 million, according to NS3.AI analysis. This scenario contrasts notably with the performance of Ethereum’s base layer, which experienced a substantial increase in active addresses during the same period.

The disparity between the two environments reflects a deeper dilemma: Layer 2 solutions need to offer more than just transaction cost reductions to retain users. Vitalik Buterin, co-founder of Ethereum, acknowledged this need, suggesting that Layer 2 networks should rethink their differentiation proposals by incorporating features such as enhanced privacy, specialized applications, or other technological innovations that justify their adoption.

The Contrast Between Layers and the Retention Challenge

The irony of the situation is that, even with scalability improvements on Layer 1 and the prospect of increasing gas limits through 2026, market confidence in Layer 2 solutions remains shaken. Skepticism persists as the underlying infrastructure strengthens its position, creating internal competition that undermines the value proposition of secondary layers.

This uncertainty has directly reflected in the markets, with notable price drops among the main tokens associated with Layer 2 networks. Investors are recalibrating their expectations, questioning whether these solutions can significantly differentiate themselves from the base layer alternative.

Beyond Speed: The Need for Purpose

Vitalik’s advice points to an inconvenient truth: speed and low fees are no longer sufficient as a value proposition. The future of Layer 2 depends on specialization and innovation in functionalities that the base layer cannot easily provide. This means networks focused on robust privacy, optimized environments for specific application types, or radically different technological mechanisms.

This strategic transformation is essential for Layer 2 solutions to regain their relevance in the ecosystem. The market has clearly signaled that merely duplicating Layer 1 functionality with lower costs does not sustain a viable long-term economic model. Layer 2 networks now face the challenge of defining unique identities and offering experiences that justify their continued existence.