Layer 1 Tokens Plunge Up to 73% in 2025 Amid Market Challenges, Reports OAK Research
OAK Research's End-of-Year report reveals that Layer 1 (L1) tokens experienced significant depreciation of up to 73% throughout 2025 despite sustained developer activity in the sector.
While Bitcoin maintained relative strength, alt-L1 tokens suffered severe sell-offs attributed to weaknesses in tokenomics and unfavorable market positioning. Notably, AVAX and TON saw declines exceeding 67%, and Solana among the major L1 tokens fell by 35.9% over the year.
Monthly active users (MAUs) on major chains also saw a downturn with an average decline of 25.15%. Solana alone lost approximately 94 million users, marking a drop of over 60%. In contrast, the user base of the BNB Chain nearly tripled.
Growth was observed in Base, a Layer-2 solution, whose total value locked (TVL) increased by 37.2% to $4.41 billion. However, Optimism’s TVL declined sharply by 63% to $786 million. Mantle rose by 8.3% largely due to supply-control tactics rather than fundamental strength.
Stablecoin issuers dominated revenue generation across top protocols, accounting for 76% of income. Tether and Circle together earned approximately $9.8 billion annually, while Hyperliquid generated $1.1 billion.
The report identifies three main forces driving the decline: overleveraged tokenomics with ongoing unlock schedules; a lack of credible value-capture mechanisms linking network usage to token demand; and institutional investor preference for Bitcoin and Ethereum over smaller-cap alternatives.
Looking ahead to 2026, the outlook remains challenging. Headwinds persist for infrastructure tokens with potential market consolidation anticipated. The report suggests survival for many smaller tokens will be closely tied to the leadership and ecosystem strength of Ethereum and Solana.
