Ethereum lost over $100 million in fees in 2025, being "stolen" by layer 2 Base

In 2025, the Ethereum blockchain experienced its most active year in history, processing record-breaking transaction volumes and dominating the DeFi market. The network demonstrated scalability and stability by handling millions of transactions daily, solidifying Ethereum’s position as the most widely used blockchain platform for commerce worldwide.

However, the most important digital asset of Ethereum – does not reflect this growth. ETH recorded double-digit losses during the year, with the price falling below $3,000, approximately 10% lower than at the beginning of the year. Its performance compared to Bitcoin – the leading digital asset – was also weaker, with the ETH/BTC ratio decreasing 6% since the start of the year.

This divergence indicates a fundamental change in Ethereum’s economic mechanism, where token prices no longer directly reflect network activity.

Daily Ethereum transaction volume (Source: YChart)## Layer-2 network profit sharply declines

Although the Ethereum network increased efficiency, technical upgrades that reduced transaction fees also led to a significant drop in direct revenue for the mainnet, causing ETH prices and actual activity to become less directly correlated.

One key factor is the decline in “rental income” (rent) from Layer-2 networks. Layer-2 solutions aggregate multiple transactions for processing on the Ethereum mainnet, saving fees but previously also serving as an important revenue source for the mainnet.

• In 2024, Layer-2 networks generated a total revenue of $277 million, of which $113 million (41%) was paid to Ethereum for data processing and network security.
• In 2025, total Layer-2 revenue decreased by 53% to $129.17 million, mainly due to lower fees for end users.
• Payments to the Ethereum mainnet dropped sharply, totaling only about $10 million, accounting for less than 10% of total revenue. The remaining approximately $119 million was retained as profit by Layer-2.

*Revenue of Ethereum Layer-2 networks (Source: Grow The Pie)*This means Ethereum “sacrificed” over $100 million in guaranteed revenue in 2025 to support the network’s long-term growth.

The main cause is the Dencun upgrade. This upgrade reduces transaction fees, allowing the network to handle higher traffic without congestion or increased fees, while supporting Layer-2 development. However, it also reduces direct revenue from Layer-2s, removing a key incentive that previously drove demand for ETH: high transaction fees caused some ETH to be “burned,” reducing supply and supporting prices.

With record-low fees in 2025, the pressure to reduce supply eased, leading to an ETH inflation rate of 0.204% since the 2022 merge event, contrary to the supply reduction trend in previous years.

Coinbase’s Base leads the Layer-2 market

The change in Ethereum’s economic model has created a concentrated Layer-2 market, where Base – a Layer-2 network developed by Coinbase – accounts for most of the revenue.

• Base generated over $75 million in 2025, nearly 60% of the total revenue in the entire Layer-2 sector.
• Arbitrum – once the market leader – only reached about $25 million.
• Polygon earned $5 million, Linea $3.94 million, and Optimism $3.83 million.

Compared to 2024, when revenue was more evenly distributed among Layer-2s, Base has emerged by directly integrating the network into the exchange’s product, driving traffic from retail users. As a result, most of the value created by the Ethereum ecosystem is now concentrated in a single enterprise entity (Coinbase) rather than being evenly shared among network participants.

This reflects a changing value distribution trend: Layer-2 networks capable of directly integrating users into their ecosystems will benefit more, rather than relying solely on transaction fees.

Ethereum’s DeFi market share peaks in years

Despite ETH’s price decline, Ethereum’s adoption within organizations continues to grow strongly. Data shows investors are not abandoning the network for cheaper or faster blockchains, contrary to the 2022 bear market trend.

• Ethereum accounts for approximately 64% of total value locked (TVL) in DeFi, up from a low of 45% in 2022.
• When including Layer-2 solutions like Base, Arbitrum, and Optimism, the market share could exceed 70%.

This reflects a “quality over quantity” trend among large investors: they prioritize Ethereum’s security and legal transparency over the short-term price potential of new blockchains. Ethereum now serves as the main (settlement layer) for the industry, although its value extraction mechanisms are under profit pressure.

Transaction volume steadily increased toward the end of the year without any sudden price peaks, indicating growth driven by actual usage rather than short-term trading frenzy.

Ethereum’s dominance in DeFi (Source: DeFiLlama)## Investors weigh utility against value

The disparity between Ethereum’s operational success and its market valuation creates a complex environment for investors in 2026. ETH’s 10% decline since the beginning of the year reflects uncertainty about the token’s role in a low-fee environment.

With the mainnet “subsidizing” Layer-2, the direct link between increasing transaction volume and rising token prices has been broken. Financial benefits are now concentrated mainly in Layer-2s and applications, rather than the entire network.

However, Ethereum supporters argue that this is a necessary transitional phase. Lower fees and higher processing capacity help Ethereum solidify its position as the global standard for blockchain transaction settlement. Tom Lee, Chairman of BitMine, predicts the token could rise above $5,000 in the coming year.