L1 Tokens Fall Over 65% By 2025 As SOL, AVAX: Report
Crypto journalist
Anas Hasan
Crypto journalist
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Layer 1 blockchain tokens have experienced a significant price drop in 2025, with the underlying asset losing up to 73% of its value despite continued developer activity, according to the latest year-end report from Oak Research.
While Bitcoin has maintained relative strength throughout the year, alternative Layer 1 tokens have experienced a brutal selloff that exposes structural weaknesses in tokennomics and market positioning.
The report showed a critical shift from speculation to fundamental value creation, where markets penalize protocols for failing to reflect real economic activity.
User area mascots market slowdown
The year saw a higher distribution of users than overall growth, with total monthly active users on major chains falling 25.15%, according to a report by BlockchainMetrics Analysis.
Solana has been in steep decline, losing nearly 94 million users (a drop of over 60), while BnBChain has nearly tripled its user base by capturing fleeing participants.
Layer 2 networks experience the same difference. Base showed very strong growth, with TVL increasing by 37.2% to 4.41 billion dollars, according to the report, strengthening its position through the distribution advantage of Coinbase.
Meanwhile, an optimistic TVL contract saw 63 percent decline, from $2 billion to $786 million, as capital turned to more aggressive competitors.
The performance of the simulation reflects the harsh reality
Price action told an unforgiving story. Of the top tier 1 markers monitored since January, only two have tested positive:
BNB gained 18.2%. TRX rose 9.8%.
The rest suffered heavy losses, with Solana down 35.9% and new entrants like Ton and Avax falling more than 67%.
Layer 2 tokens have gotten worse despite their technical progress.
The report documents that Optimism and zkSync Era both posted more than 84% declines, while Polygon and Arbitrum fell more than 73%.
Only Mantle managed a modest gain of 8.3%, driven by concentrated supply control rather than fundamental strength.
The report identifies several converging forces behind the decline. They can be summed up in three main reasons:
Overweight Tokinomics with a series of opening programs. Lack of reliable value-capturing mechanisms linking network usage to token demand. Institutional preference for Bitcoin and Ethereum over small cap alternatives.
Developer activity varies from price
Despite the decline in prices, developer activity has remained strong in selected ecosystems, according to data from Electric Capital cited in the report.
The EVM stack maintains its largest developer base with 17,473 total contributors (updated), including 5,405 full-time developers, representing over 32% of activity.
Bitcoin posted the strongest two-year growth in full-time developers among major ecosystems, growing 90.5% to 1,003 contributors.
Solana and the broader SVM Stack have grown by 75.8% in two years to 4,578 full-time developers, demonstrating continued technical ambition despite abysmal performance.
Overall, the developer ecosystem is growing, but the disconnect between their activity and token value shows what the report describes as “market immaturity.”
Teams continue to build in cycles, but venture capital no longer rewards infrastructure if there are no clear avenues for monetization.
Revenue meta has emerged as a standard.
The basic education of 2025 became inevitable according to the economic analysis of the report. Protocols without reliable sources of income are at risk of extinction, the report said.
The industry has shifted decisively toward the “revenue meta,” where actual cash flows are more important than narrative.
Stablecoin issuers dominate revenue generation, accounting for 76% of revenue among major protocols.
Tether and Circle combined bring in $9.8 billion a year, while derivatives like Hyperliquid add $1.1 billion in sustainable fee-based models.
The report also pointed out the hard truth that generic Layer 1s and Layer 2s cannot compete.
Networks need a 10x improvement in speed, cost or security to ensure free existence.
Outlook remains challenging
In the year Looking ahead to 2026, infrastructure tokens will face continued headwinds despite regulatory clarity in key markets, the report concluded.
High inflationary schedules, insufficient demand for management rights, and the accumulation of inflation in the underlying strata indicate further consolidation ahead.
The overall mood of the altcoin market heading into 2026 is cautious, especially as they are experiencing unprecedented highs.
Protocols that generate meaningful revenue can stabilize, but remain subject to Bitcoin's volatility and open to constant pressure from early investors.
For existing Layer 1 tokens, the report confirms that survival depends on Ethereum and Solana, and may return hope for renewed institutional adoption.
Outside of the major market leaders, general infrastructure tokens will continue to gain relevance as they focus on protocols that demonstrate economic value rather than technological innovation.
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