2025 Crypto Market Shakeup: User Losses Intensify, Bitcoin Dominance Rises, Layer 1 Tokens Under Pressure

In 2025, the cryptocurrency market experienced significant structural changes. Although developer activity remained active, users and capital are accelerating their concentration into Bitcoin, Ethereum, BNB Chain, and protocols with stable yield capabilities, leading to substantial declines in the prices of many Layer 1 and Layer 2 tokens. OAK Research’s latest year-end report points out that this downturn is not merely a market sentiment issue but a result of long-standing tokenomics and value capture flaws becoming increasingly apparent.

The report shows that most mainstream Layer 1 blockchain tokens recorded annual losses in 2025, with some emerging projects experiencing particularly sharp declines. On-chain data further confirms the trend of user attrition: the total monthly active users of major public chains decreased by approximately 25% year-over-year. Among them, Solana saw the most significant decline, with a drop of over 60%; in contrast, BNB Chain’s user count nearly tripled, mainly benefiting from attracting existing users from other ecosystems.

The Layer 2 sector also exhibited clear differentiation. The TVL growth was most prominent in leading compliant US-based CEX ecosystem-related networks, while projects like Optimism and zkSync Era continued to see capital outflows, and Polygon and Arbitrum were not immune. The report notes that a few relatively stable projects rely more on token concentration and supply control rather than genuine fundamental improvements.

OAK Research attributes this round of decline to three core factors: first, over-reliance on high-inflation and continuously unlocking token models; second, the lack of a value capture mechanism that directly links network usage to token demand; third, institutional capital shows a clear preference for high-certainty assets like Bitcoin and Ethereum rather than small- and mid-cap infrastructure tokens.

Notably, the low prices have not completely dampened developer confidence. Data from Electric Capital shows that the number of full-time developers in Bitcoin, EVM, and Solana ecosystems continues to grow, indicating a decoupling of technological development from capital speculation. The report believes this phenomenon signifies that the market is maturing, and relying solely on “narratives” and technological ideals can no longer sustain token valuations.

Looking ahead to 2026, the report expects regulatory environments to become clearer, but general Layer 1 and Layer 2 tokens will still face pressure. Future capital is likely to continue focusing on protocols capable of generating real income and sustainable cash flow, while infrastructure tokens that cannot demonstrate economic value may further marginalize.