The Rise of Ethereum L2s and the Resurgence of Solana: A 2025 Mid-Year Blockchain Overview
As we reach the middle of 2025, the digital assets team at ARK Invest has released a report titled "Scaling Blockchains Research | 2025 Mid-Year Review." This article summarizes the key points of that report, focusing on the scaling progress of major blockchains like Ethereum, the competitive landscape of Layer 2 (L2) networks, the expansion of the decentralized application (DApp) market, and the resurgence of Solana. We will break down the technical content and provide an overview of the dynamism in the blockchain industry during the first half of 2025, incorporating specific data and case studies.
1. Progress in Ethereum Scaling and the Rise of Layer 2
1-1. Significant Reduction in Transaction Costs
Due to major Ethereum upgrades implemented in 2024, transaction costs on L2s have been reduced by 10 to 20 times compared to previous levels. This has created an environment where users can process transactions more cheaply and quickly on Ethereum, where high gas fees (transaction costs) have often been a point of concern.
1-2. User Migration and Surge in Transaction Volume
As a direct effect of cost reductions, over 85% of transactions on Ethereum have migrated to L2s. According to data, the total number of transactions across all Ethereum-based L2 networks has increased dramatically over the past year. Users are experiencing "cheaper" and "faster" transactions, leading to expanded access to diverse DApps such as DeFi, NFTs, and gaming.
1-3. Future Upgrade Plans by the Ethereum Foundation
The Ethereum Foundation is focusing not only on L2s but also on improving the performance of Layer 1 (L1). In the second half of 2025, plans include increasing the gas limit of the base layer and introducing new execution clients, which are expected to expand the options for users to choose L1 directly.
2. Competitive Landscape of Layer 2 Networks
2-1. The Dominance of "Base" from CoinbaseBase" (Note: The placeholder was used to wrap the name Base)
The biggest topic of 2025 is "Base," the L2 designed and nurtured by Coinbase. It has established itself as the de facto "L2 king," accounting for the majority of the L2 market in terms of active users, transaction volume, and fee revenue.
2-2. Trends Among New Entrants
However, movements to challenge the Base-dominated regime are also intensifying.
Kraken (major European exchange): Announced its own L2, "INC".
Robinhood: Plans to launch "Robinhood Chain" utilizing Arbitrum technology.
Athena (security token issuer): Building "Converge".
Worldcoin: Deploying L2 on the Optimism stack.
With the entry of these competitors, the L2 space is entering a "healthy state of competition" where more diverse services and use cases are intersecting.
2-3. Benefits of Healthy Competition
The coexistence of diverse L2s not only increases options for users and developers but also triggers innovation such as cost competition, improved UX, and enhanced security. As L2s compete with each other, a virtuous cycle is emerging that increases the resilience and appeal of the entire ecosystem.
3. Efficiency in Decentralized Applications and Trading Infrastructure
3-1. Expansion of DApp Market Share
As of January 2025, DApp spot and derivative trading volumes on public blockchains have doubled their market share compared to centralized exchanges (CEX) year-over-year, reaching approximately 20% of the total. With on-chain capital formation accelerating rapidly, DApps have established a firm position as challengers to traditional financial infrastructure.
3-2. Efficiency Comparison: Decentralized Exchanges vs. Centralized Exchanges
According to ARK's research, major DEXs such as Raydium, Uniswap, Orca, and Aerodrome are achieving performance equal to or better than CEXs with thousands to tens of thousands of employees, despite having fewer than 100 employees themselves. Their trading efficiency per employee is 5 to 10 times higher, highlighting the inherent advantages of smart contract-based systems.
3-3. The Rise of Hybrid Models
Even more noteworthy is the increase in "hybrid operations," where centralized exchanges launch their own L2s while fostering DEX ecosystems. Coinbase is supporting DEXs on Base, and Robinhood and Kraken are planning to adopt similar strategies. This is paving the way for traditional CEX users to access decentralized protocols seamlessly.
4. Solana's Resurgence and Future Outlook
4-1. Design Philosophy Focused on the Base Layer
Solana, which briefly fell to the $8 range during the 2024 bear market, demonstrated the "secret to its revival" through a design that pushes base layer performance to the limit. By prioritizing high TPS (≈800) on the base layer without fearing scaling trade-offs, it has achieved performance that stands out even when compared to Ethereum-based L2s.
4-2. Transaction Throughput and Developer Trends
Currently, Solana boasts 4 to 5 times the throughput of Ethereum and has emerged as a top-tier player in terms of active users and fee revenue. Furthermore, from 2024 to early 2025, Solana ranked first in "net new crypto developers." Base also entered the top 5 in developer acquisition, accelerating the momentum for ecosystem expansion heading into 2025.
4-3. Future Upgrade Plans
Solana plans to launch the execution client "Fire Dancer" and the consensus client "Alpenlow" sequentially. These are expected to further improve stability, security, and performance, ensuring that it maintains its competitiveness as a top-tier blockchain.
The first half of 2025 in the blockchain industry was characterized by improved scalability through the widespread adoption of Ethereum L2s, fierce competition among L2s led by Coinbase's Base, and the increased efficiency and penetration of hybrid DEX models. Amidst this, Solana has achieved a resurgence through its unique high-throughput design, garnering support from both developers and users. We must continue to watch how the Ethereum L1 upgrades and new feature releases from various chains scheduled for the second half of the year will shape the next phase.
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