In recent months, Ethereum (ETH) reserves on Layer 2 (L2) networks have plummeted, with the overall ETH balance dropping by approximately 25%.
ETH on Optimism has fallen by as much as 54% since March, while Arbitrum and Base have seen declines of 17% and 14%, respectively.
What is driving this decline?
The chart from The DeFi Report clearly illustrates this trend, particularly since early 2025, when major L2 networks like Optimism and Base have witnessed significant ETH withdrawals. According to analyses, the weakening prices of native Ethereum L2 tokens are a critical factor.
ETH reserves on L2 networks have plummeted. Source: The DeFi Report
Tokens such as OP from Optimism have dropped more than 38% over the past 90 days. Meanwhile, ARB from Arbitrum has declined by 21%. This downturn has reduced investor appeal, prompting them to shift to other platforms.
At the same time, a portion of ETH is returning to the Ethereum mainnet, which is considered safer due to its high security.
Additionally, the amount of ETH being staked and the number of long-term holding addresses have reached new highs, indicating that investors prioritize value-preservation strategies over trading on Ethereum L2.
Another potential factor is the movement of ETH from Accumulation Addresses. Data from CryptoQuant indicates that large wallets are reallocating assets, increasing selling pressure on L2.
Accumulation Addresses (holders with no history of selling) have reached an all-time high, now holding 22.8 million ETH. Many public companies also include ETH as a reserve asset.
Total value of ETH staked. Source: CryptoQuant
“In just the first half of June, more than 500,000 ETH have been staked, pushing the total locked amount to a new all time high of over 35 million ETH. This growth signals rising confidence and a continued drop in liquid supply,” a CryptoQuant analyst stated.
Impact on the Ethereum Ecosystem
This decline marks a shift from 2024, when L2s were seen as a threat to the mainnet due to their ability to attract users and transaction fees. However, the reverse trend is unfolding now, with the mainnet recording increased activity.
This could strengthen Ethereum’s position, especially following the successful Pectra upgrade last month, which enhanced performance and reduced costs. However, L2s like Optimism and Base need to improve to regain trust; otherwise, they risk losing their critical role in scaling the network.
ETH’s departure from L2s may last until this month’s successful Pectra upgrade or strategy adjustments amid market volatility. However, to recover, L2s must focus on improving liquidity and reducing reliance on easily manipulated tokens.
Developers could consider implementing more transparent incentive mechanisms while collaborating closely with centralized exchanges to stabilize capital flows.
ETH staking ratio.Source: Staking Rewards
Moreover, the growth of ETH staking—now accounting for nearly 29% of the total supply—reflects long-term confidence in Ethereum. If L2s fail to adapt promptly, they may lose their competitive edge while the mainnet solidifies its leading position.
