Ethereum News Today: Ethereum's Layer-2 Exodus: Boosting Scale, Undermining Value?

Ethereum (ETH) fell to a four-month low below $3,000 this week, raising questions about the health of the broader crypto bull market. The digital asset declined 3.46% to $3,417.77 as of 5 p.m. ET, marking its largest single-day drop since November 2025. The decline accelerated a multi-week downward trend, with ETH down 11.44% month-to-date and 31% from its all-time intraday high of $4,955.23 in August 2025.

The price weakness coincided with deteriorating fundamentals on the Ethereum network. Total Value Locked (TVL) dropped to $74 billion, a 13% decline from a month earlier. Activity on Ethereum's decentralized exchanges (DEXes) also waned, with trading volume falling to $17.4 billion in the past seven days, a 27% monthly drop. While Ethereum maintains its dominance in TVL, it faces intensifying competition from rivals like Solana and BNB Chain in trading volume.

The shift in user behavior highlights a broader trend toward Ethereum's layer-2 scaling solutions. Networks like Base, Arbitrum, and Polygon have absorbed much of the transaction load, processing over 100 million transactions in the past week alone. However, this migration has reduced demand for base-layer fees, complicating Ethereum's ability to sustain price momentum. Critics argue that while layer-2s enhance scalability, they also fragment the network's economic model.

Despite the near-term selloff, some analysts see potential for a rebound. Ethereum's ecosystem remains a leader in real-world asset (RWA) tokenization and decentralized stablecoin systems, with projects like Sky (formerly MakerDAO) maintaining critical infrastructure roles. A key factor for ETH's outlook will be global macroeconomic conditions, particularly U.S. government debt dynamics. If central banks inject liquidity to support economies amid political uncertainty, Ethereum could retest the $3,900 level.