A CoinDesk commentary argues that while Ethereum Layer 2 is not in overall decline, many general-purpose networks are entering a period of contraction. As the barrier to entry for launching a blockchain continues to decrease, the real scarcity is no longer technical capability, but rather users, liquidity, and sustained transaction demand.
The leading networks account for the majority of the funds.
The article mentions that after Zero Network announced its closure last month, the market is once again discussing whether Ethereum Layer 2 is overcrowded. Many industry insiders believe that the problem lies not in the Layer 2 approach itself, but in the excessive number of general-purpose chains.
Over the past few years, with the maturation of infrastructures such as OP Stack, Arbitrum Orbit, and zkSync, the cost and complexity of launching a Rollup have significantly decreased. However, the fact that a chain can be launched more quickly does not guarantee that it will successfully attract users and funding.
According to DefiLlama data, the Base and Arbitrum networks currently account for more than 80% of the total locked value in Ethereum Layer 2 DeFi, and the activity of the ecosystem is becoming increasingly concentrated in a few leading projects.
Multiple network bridging deposits declined
The article states that bridge deposits on networks such as Linea, World Chain, Starknet, and Mantle have all declined over the past six months, reflecting the greater pressure faced by small and medium-sized Layer 2 networks in maintaining liquidity.
Linea's bridge deposits have fallen by more than 60%, from $976 million in November 2025 to $367 million in May 2026. Alice Hou, a former research analyst at Messari, stated that the key to a Layer 2 blockchain's long-term viability is not technological feasibility, but rather sufficient demand for block space, user activity, and developer investment.
She pointed out that although the cost of submitting data to the mainnet by Rollups has decreased significantly after Ethereum completed the Dencun upgrade in 2024, the reduction in operating costs has not solved the problem of insufficient demand. For many teams, the real challenge remains how to create stable use cases.
Application-oriented chains are more likely to remain.
The article argues that the industry is shifting from an infrastructure narrative to an application scenario narrative. Some projects that originally emphasized a general-purpose blockchain positioning are beginning to focus on more specific business areas such as payments, stablecoins, and tokenized assets.
Ben Fisch, co-founder and CEO of Espresso Systems, stated that Layer 2 is more of a way to deploy applications on-chain than simply scaling Ethereum. Within this framework, Ethereum is closer to the settlement and security layers, allowing applications to invoke them on demand.
The article also mentions that companies with existing user distribution capabilities are better suited to building their own Layer 2 platforms. Trading platforms are considered strong candidates, with Coinbase's Base being a typical example, leveraging its existing user base to drive traffic to the broader Ethereum DeFi ecosystem.
Overall, this commentary argues that the future of Ethereum Layer 2 may not be a competition among hundreds of general-purpose chains, but rather a coexistence of a few leading networks and a number of dedicated networks built around specific business scenarios.
