by Coinstrooper Crypto Articles
Quick Take
  • Meanwhile, Optimism saw TVL contract 63%, dropping from nearly $2 billion to $786 million as capital rotated toward more aggressive competitors.
  • Among major Layer 1 tokens monitored since January, only two finished positive:
  • The remainder suffered catastrophic losses, with Solana dropping 35.9% and newer entrants like TON and AVAX falling over 67%.
  • Layer 2 tokens fared even worse despite technical progress.

What Happened

Layer 1 blockchain tokens suffered severe depreciation in 2025, with major assets losing up to 73% of their value despite sustained developer activity, according to the latest End-of-Year report from OAK Research.

The year witnessed massive user redistribution rather than overall growth, with total Monthly Active Users declining 25.15% across major chains, according to the report’s blockchain metrics analysis.

Layer 2 networks experienced similar divergence. Base demonstrated the strongest growth, with TVL rising 37.2% to $4.41 billion, according to the report, solidifying its position through Coinbase’s distribution advantage.

Market Context

While Bitcoin maintained relative strength throughout the year, alternative Layer 1 tokens experienced brutal sell-offs that exposed structural weaknesses in tokenomics and market positioning.

The report reveals a decisive shift from speculation to fundamental value creation, with the market punishing protocols unable to show genuine economic activity.

User Reallocation Masks Market Stagnation

Solana suffered the steepest decline, losing nearly 94 million users (a drop of more than 60%), while BNB Chain almost tripled its user base by capturing fleeing participants.

Meanwhile, Optimism saw TVL contract 63%, dropping from nearly $2 billion to $786 million as capital rotated toward more aggressive competitors.

Price action told an unforgiving story. Among major Layer 1 tokens monitored since January, only two finished positive:

Lack of credible value-capture mechanisms linking network usage to token demand.

Institutional preference for Bitcoin and Ethereum over smaller-cap alternatives.

Developer Activity Diverges From Price

Despite price carnage, developer activity remained robust across select ecosystems, according to data from Electric Capital cited in the report.

Why It Matters

Token Performance Reflects Brutal Reality

BNB gained 18.2%.

Details

TRX rose 9.8%.

The remainder suffered catastrophic losses, with Solana dropping 35.9% and newer entrants like TON and AVAX falling over 67%.

Layer 2 tokens fared even worse despite technical progress.

The report documents that Optimism and zkSync Era both posted declines exceeding 84%, while Polygon and Arbitrum fell by more than 73%.

Only Mantle managed a modest 8.3% gain, attributed to concentrated supply control rather than fundamental strength.

The report identifies several converging forces behind the decline. They can be summed up into three main reasons:

Overleveraged tokenomics with continuous unlock schedules.

The EVM Stack maintained the largest developer base, with 17,473 total contributors (updated), including 5,405 full-time developers, representing over 32% of activity.

Bitcoin posted the strongest two-year growth in full-time developers among major ecosystems, rising 90.5% to 1,003 contributors.