The market is expressing skepticism towards Ethereum's second-layer networks as activity declines.

Ethereum Layer 2 networks are experiencing a serious investor trust crisis. Amid widespread market skepticism, the number of active users on these platforms has dropped from 58.4 million to approximately 30 million, indicating fundamental challenges facing this segment of blockchain technology.

Rapid decline in the Layer 2 user base

Data published by NS3.AI reveal a paradoxical situation within the Ethereum ecosystem. While the main network layer shows strengthening with the doubling of active addresses, Layer 2 networks are experiencing a significant outflow of users. This contradiction points to deeper issues in how market participants perceive the value of Layer 2 solutions.

The decline in user numbers occurs despite transaction fees remaining relatively low, and protocol developers planning to increase gas limits, which should have stimulated activity. However, instead of the expected growth in interest, the market shows the opposite effect — a decisive skepticism about the future prospects of this blockchain development direction.

Vitalik Buterin on redefining value propositions

Vitalik Buterin, one of Ethereum’s co-founders, has proposed a radical overhaul of the development strategy for Layer 2 networks. In his view, these platforms have ceased to be attractive, focusing solely on scaling and lowering fees. Instead, Buterin emphasizes the need to focus on other innovative directions — implementing privacy mechanisms, creating specialized applications, or developing unique functionalities that cannot be achieved at the base layer.

This recommendation reflects an understanding that traditional positioning of Layer 2 networks has exhausted its potential as a competitive advantage. To restore investor and user interest, a shift toward more specific and innovative solutions is necessary.

Why market skepticism is increasing despite improvements

Despite plans to raise gas limits, which are to be implemented by 2026, and maintaining low transaction fees, market caution not only persists but intensifies. This is evidenced by significant declines in the value of major Layer 2 tokens, indicating a loss of investor confidence.

Market skepticism is based on the understanding that technical improvements alone are insufficient to attract and retain users. The market demands not only efficiency but also a unique value that a specific Layer 2 network can offer its participants. Without a clear definition of this unique proposition, Ethereum Layer 2 networks will continue to face pressure and lose market position.