Ethereum has shown a robust performance with a 25% increase over a specific period, sustaining gains after the successful Pectra upgrade last month. Despite this, a notable trend has emerged: ETH balances across Layer 2 (L2) networks have declined by approximately 25% in recent months. This change marks a new phase in the growing impact of Ethereum on the world beyond its ecosystem.

This blog post explores the trends behind this change. Specifically, it looks at how well their native tokens are performing across these networks and provides insights into what the recent upgrades to the Ethereum network mean.

Declining ETH on Layer 2 Networks

Ethereum reserves on Layer 2 networks like Optimism, Arbitrum, and Base have all seen sizeable decreases. Meanwhile, Optimism’s bridged ETH supply has taken a big hit. It plummeted from 1.12 million at the beginning of 2025 down to roughly 566,000 by mid-June—a shocking 50% reduction in just half a year’s time.

In particular, ETH on Optimism is down 54% since March. It's down 17% and 14% on Arbitrum and Base. - Michael Nadeau

Likewise, ETH balances on Arbitrum and Base have taken a hit, down 17% and 14%, respectively. These declines imply a flow of ETH in the opposite direction from these scaling solutions.

Binance’s data provides a clue as to why this might be the case. If true, the exchange would be ordering up quite the reversal of funds from Layer 2 networks back to the Ethereum mainnet. Many things might be at play here. New user sentiment, new shift in VC money patterns, and shift in network incentives.

Native Token Performance

The performance of native tokens tied to these Layer 2 networks tells a different story. Optimism’s native token OP is down over 38% in the last 90 days. Arbitrum's ARB has experienced a 21% decrease, while ZKsync's ZK has seen a significant loss of 44% during the same period.

Users might just be in the process of moving their assets back to the Ethereum mainnet. They might be looking for more dependable projects or other investments as token values decrease. The Layer 2 token markets are quite volatile at present. As a result, this may be contributing to a loss in ETH on these networks.

Impact of Ethereum Upgrades and Staking

This trend was influenced by recent Ethereum upgrades, including the most recent Dencun upgrade that had EIP-4844 in it. The upgrade, known as EIP-1559, not only lowered fees but raised fears of a “vampire attack” on Ethereum.

L2s are effectively stealing ETH users & fees. By pretending they are the ‘same’ as ETH, but that could not be further from the truth... at worst, it is a vampire attack. - Justin Bons

These new Layer 2 networks were originally seen as a threat — by attracting users and fees away from Ethereum they would “drain” the network. As of June 15, the total value of staked ETH reached an all-time high of 34.84 million ETH. That’s a whole 1% higher than last week’s record high! And there’s massive growth in staking activity on the mainnet. As users seek to optimize their staking rewards, this trend might be draining ETH from Layer 2 networks.