Layer 1 Tokens’ Downfall: Users Flee, Revenues Hide in Stablecoins 🚨

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Yup, in the year 2025, the L1 and L2 tokens found themselves in a pickle, as users switched sides like a fickle politician, MAUs dropped 25%, while the revenues gathered in stablecoins, and the developers kept on truckin’ like nothing happened. 🐢

overleveraged tokenomics with continuous unlock schedules, a lack of value-capture mechanisms linking network usage to token demand, and institutional preference for Bitcoin and Ethereum over smaller-cap alternatives. 🧠

Developer activity remained robust in select ecosystems despite the price drops, as per Electric Capital’s data. The EVM stack had the largest developer base, with thousands of contributors. Bitcoin saw the strongest two-year growth in full-time developers, while Solana and the SVM stack also grew. 🧑‍💻

The gap between developer activity and token prices showed the market’s maturity. Development teams kept building through the downturn, but capital no longer flowed to infrastructure without a clear revenue path. 🧩

Protocols without revenue streams were in a world of hurt, as per the report. Stablecoin issuers dominated the revenue scene, with Tether and Circle raking in big bucks, while derivatives platforms added fee-based income through sustainable models. 💸

Layer 1 and infrastructure

Generic Layer 1 and Layer 2 networks that lacked differentiation found themselves in a tough spot, as the report found. To survive, they needed substantial improvements in speed, cost, or security to justify their existence. 🚧

Infrastructure tokens are in for more pressure in 2026, even with regulatory clarity. The mix of high inflation, low demand for governance rights, and value concentration in base layers points to more consolidation. 🧱

Protocols that generate real revenue might stabilize, but they’re still at the mercy of market swings and early investors’ unlock schedules. The report suggests that survival for existing Layer 1 tokens hinges on leadership from major platforms and a renewed institutional adoption. 🌟

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2025-12-25 16:04