The Ethereum Layer 2 ecosystem is undergoing a tough selection process. After the closure of Zero Network, the market is once again discussing the fact that there are too many rollups, and some universal networks can no longer explain why they are needed.
The problem is not with the technology itself. Rollups remain an important part of scaling and help applications get fast transactions and low fees. But launching a network has become much easier than attracting users, liquidity, and developers.
The Market No Longer Wants Dozens of Identical Networks
In recent years, layer 2s have launched one after another. Ready-made infrastructure kits like OP Stack, Arbitrum Orbit, and zkSync solutions have helped. Teams found it easier to launch their own network, connect to Ethereum, and offer cheap transactions.
But the market quickly ran into another problem. Most of these projects looked too similar: Ethereum compatibility, low fees, standard DeFi infrastructure, and the promise of a future ecosystem. For users, this is no longer enough.
Espresso Systems cofounder Ben Fisch believes that consolidation is now happening specifically among universal L2s, not the entire segment. According to him, if a network does not offer a distinct product or a clear use case, it is difficult for it to compete with dozens of similar solutions.
Liquidity Has Concentrated With a Few Leaders
Market data shows strong concentration. Base and Arbitrum control more than 80% of DeFi TVL among Ethereum layer 2s, according to DefiLlama. This means that the main liquidity has gone to a few large networks, and it is becoming increasingly difficult for smaller projects to maintain activity.
The decline is also visible in bridge deposits. Over the past six months, Linea, World Chain, Starknet, and Mantle have all seen outflows. Linea’s bridge deposit volume fell from $976 million in November 2025 to $367 million in May 2026.
For smaller rollups, this is a serious signal. If users withdraw assets, liquidity drops, there are fewer incentives for developers, and interest from new projects falls. As a result, the network may remain technically operational but economically weak.
Cheap Launches No Longer Solve the Problem
The paradox is that maintaining an L2 has become cheaper. The Dencun upgrade in 2024 reduced rollup costs for publishing data to Ethereum via blobs. For many OP Stack-based networks, data availability costs now make up only a small part of operating expenses.
But low costs do not create demand by themselves. If a network has few users, few applications, and no sustainable economic activity, even a cheap rollup does not have much meaning.
Former Messari analyst Elis Howe believes that only networks with clear financial demand will survive. In her view, without blockspace load, user activity, and developer interest, maintaining a separate L2 becomes less and less justified.
The Future Belongs to Networks With a Specific Purpose
The main shift has already begun. Projects are increasingly moving away from the idea of “just another universal network” and are building infrastructure for specific markets: payments, stablecoins, tokenized assets, deposits, and products for financial companies.
For such players, their own layer 2 can be useful. It gives more control, predictable fees, and the ability to tailor the network to a specific business. In this case, L2 becomes not a blockchain for the sake of blockchain, but a technical foundation for a product.
Fisch cites asset managers, stablecoin issuers, and tokenized deposit platforms as examples. They already have users, financial flows, and a clear reason to move to blockchain. For such companies, their own network can be a logical business extension.
Exchanges Remain Strong Candidates
The most obvious example is Base. The Coinbase network was able to quickly take a strong position because the exchange already had a huge user base and a clear path to connect them to DeFi.
This sets it apart from many universal L2s, which first launch a network and then try to find an audience. A large exchange takes the opposite approach: the audience already exists, and the blockchain becomes a new layer for applications, payments, and on-chain activity.
Howe believes that the main question should not be “can a company launch an L2,” but “does it have an audience, financial activity, and ecosystem connections to make this network truly useful.” This is a tougher but more honest criterion.
Ethereum Is Becoming a Settlement Layer
The debate around L2s is also changing the view of Ethereum itself. Previously, rollups were more often described as a tool for scaling the main network. Now, more and more participants see them differently.
Fisch believes that layer 2s do not so much scale Ethereum as use its security. In this model, the main network becomes a settlement layer that applications connect to when they need trust, finality, and protection.
This is an important distinction. Ethereum is no longer the place where everything must happen. It becomes the basic infrastructure, and on top of it, specialized products, financial networks, and applications with their own logic can operate.
What’s Next?
The layer 2 market is not dying, but universal networks without a strong audience will lose ground. A cheap launch is no longer an advantage. The advantage is distribution, liquidity, and a clear product.
Most likely, the ecosystem will become less chaotic. Instead of hundreds of similar rollups, the market may shift to a smaller number of strong networks tied to specific businesses, financial products, and user communities.
The main takeaway is simple. L2 Ethereum will live where there is real demand. If a network does not provide distinct value, does not gather liquidity, and does not solve a specific problem, just being “another rollup” is no longer enough.
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