21Shares Forecasts Consolidation of Ethereum Layer 2 Networks by 2026
21Shares projects that most Ethereum Layer 2 (L2) networks may not survive through 2026, with user activity increasingly concentrated around three main networks: Base, Arbitrum, and Optimism. By late 2025, these three networks are expected to consolidate about 90% of L2 transactions, with Base accounting for over 60% of the total.
Since June, L2 usage has declined by 61%, as smaller rollups have become "zombie chains" characterized by minimal activity and liquidity. Several projects have either shut down or scaled back services, including the closure of Kinto, the shutdown of the Loopring wallet, and a 97% collapse in Blast's TVL. Major DeFi protocols such as Aave and Synthetix have retreated from weaker L2s due to concerns about liquidity and returns.
The Ethereum Dencun upgrade, which introduced a 90% fee reduction, has triggered aggressive fee competition among rollups, pushing most into financial losses. Base has remained the only profitable L2 throughout 2025, generating approximately $55 million. Looking forward, 21Shares anticipates a leaner and more resilient L2 ecosystem by the end of 2026, potentially incorporating Ethereum-aligned designs like Linea that burn or redirect fees to the Ethereum mainnet.
Exchange-backed networks are actively reshaping the L2 landscape, with Coinbase's Base and Binance's BNB Chain leading the charge. Other networks such as Mantle (Bybit) and Ink (Kraken) are expected to join this consolidation trend.
In the broader cryptocurrency market, 21Shares cites multiple growth trends: stablecoins might reach $1 trillion in circulation; crypto Exchange Traded Products (ETPs) could surpass $400 billion; DeFi total value locked is predicted to top $300 billion; and prediction markets may exceed $100 billion in annual trading volume.
