Activity within Ethereum’s ecosystem is undergoing a transformation, with Layer 2 usage declining while value continues to be firmly rooted in the base layer. The L2 to L1 Daily Active Users ratio experienced a significant decline, dropping to 1.12 in February 2026, a stark contrast to the peaks observed in 2025, indicating a fragmented landscape in user growth. With execution expanding across Layer 2 solutions, the base layer continues to ensure settlement and liquidity, thereby maintaining its structural dominance. Stablecoin supply approaching $163.3 billion on the mainnet indicates that capital continues to flow towards areas where finality and security are most robust. Fee dynamics highlight this divergence, as base fees average 12.6 gwei while only 267 ETH are burned weekly, indicating a decline in demand. L2s are contributing minimal burn, which means that economic value remains closely tied to L1. This shift is increasingly evident as user activity and liquidity begin to diverge across layers. The L2-to-ETH Daily Active Addresses ratio surged from approximately 2 in early 2023 to more than 15 by mid-2024, indicating a swift migration of users to L2s in search of lower transaction costs.
However, this growth did not sustain, as the ratio fell to approximately 10–11 by 2026, indicating a slowdown in user activity. This decline indicates that L2 usage is diminishing instead of growing. Capital is exhibiting a distinct trend, with the L2-to-ETH stablecoin ratio reaching a peak close to 0.30 before stabilizing in the range of 0.20–0.22. This indicates that liquidity is maintaining its strength relative to user activity. This disparity indicates that value is concentrated in areas where security and flexibility are most robust. Consequently, Ethereum continues to serve as the primary layer for liquidity, despite the increasing activity across L2s. The trend is bolstered by regulatory changes that are shaping capital flows. Ethereum has captured approximately $9.6 billion, representing 58% of the $16.5 billion RWA market, highlighting the growing interest from institutions seeking regulated assets and reliable settlement solutions.
With the increasing demand, capital stays anchored on the base layer, as high-value transactions necessitate robust security and finality. This highlights the reason liquidity remains stable despite user engagement shifting towards more affordable L2 networks. ETF flows are reinforcing this trend, as spot ETH products have drawn in $9.9 billion in inflows through 2025, with assets under management surpassing $12 billion into 2026. This consistent upward trend indicates an increase in institutional confidence. This pattern suggests that Ethereum is reinforcing its status as the leading layer for extensive value settlement.
In summary, if this capital continues to accumulate, Ethereum could solidify its position, enabling ETH to appreciate as increased activity takes place on L1. However, if users continue to engage with L2s while capital remains inactive, this growth might not lead to improved price performance. Ethereum is witnessing a significant concentration of capital on Layer 1, with stablecoins totaling $163.3 billion and a 58% share of real-world assets, as Layer 2 activity shows signs of weakening. ETH currently depends on the utilization of active capital, with Layer 1 flows bolstering its strength, whereas passive liquidity could constrain price increases.