L2s appear to have beaten Ethereum: So why is ETH still a Billion-dollar bet?

Ethereum [ETH] remains to be the bottom layer that retains Web3 operating, however the exercise it as soon as hosted now takes place elsewhere.

New information reveals that Layer-2 networks deal with many of the ecosystem’s transactions, at the same time as Ethereum continues to energy the underlying system. It retains the thought of ​​’digital oil’ alive, whereas combustion takes place exterior the chain.

On the similar time, Ethereum’s personal numbers are cooling off.

L2s now management nearly all of Ethereum’s transaction circulation

Supply: Dune Analytics

The pie chart reveals how Polygon, Arbitrum, and Optimism dominate complete transactions, leaving solely a small share for smaller rollups like Linea, Scroll, and zkSync.

This isn’t a one-off. Day by day transaction information reveals that Polygon and Arbitrum constantly course of between 2 and 4 million transactions per day, with Optimism driving extra exercise.

Collectively, these L2s deal with rather more visitors than Ethereum’s mainnet, so customers have clearly moved to cheaper, quicker tiers.

What does that imply for Ethereum’s ‘digital oil’ story?

The metaphor still resonates, particularly with the associated fee financial savings of EIP-1559 and the long-held concept that Ethereum’s utility ought to help its worth. And but, ETH provide has develop into inflationary once more, at the same time as L2 utilization grows.

Supply: Arkham

Critics declare it is a results of income shifting off-chain, with sequencer charges and MEV being captured by rollups relatively than returning to Ethereum itself.

Proponents counter that Ethereum’s function is evolving right into a core infrastructure, making it much less of a commodity and extra of the digital land on which every thing is constructed.

A slower L1 doesn’t imply a weaker ETH

DeFiLlama information reveals TVL declining to round $66 billion, persevering with the downward development via the top of 2025. The exercise clearly migrates to L2s. But derivatives merchants don’t deal with ETH as a disappearing asset.

Supply: DeFiLlama

AMBCrypto beforehand reported that Ki Younger Ju, CEO of CryptoQuant, marked Ethereum as considerably undervalued, noting that 10 out of 12 valuation fashions present ETH buying and selling properly under truthful worth.

On the time, the Composite Truthful Worth valued ETH at nearly $4.8,000, implying that the asset was nonetheless roughly 59% undervalued regardless of the macroeconomic weak point.

Combination open curiosity stays elevated above $15 billion, and funding charges stay constantly optimistic. The market remains to be pricing ETH as core infrastructure relatively than a buying and selling exercise the place folks exit.

Supply: Coinalyse

At the same time as base layer utilization declines, the trustworthy have not gone anyplace.

Ultimate ideas

• Ethereum’s worth stays intact as L2 adoption will increase and fashions proceed to cost ETH properly above present ranges.
• Regardless of weaker L1 figures, there may be confidence.