Why Long-Term L1 Token Value Remains Questionable in a Commoditized Blockchain Landscape

The blockchain ecosystem in 2025 is undergoing a profound transformation, marked by the rapid adoption of Layer 2 (L2) scaling solutions and the commoditization of foundational infrastructure. While Layer 1 (L1) blockchains like Ethereum, Solana, and Polkadot remain central to the ecosystem, their long-term token value is increasingly called into question by strategic moat erosion and shifting investor positioning. This analysis explores how the interplay of scalability demands, application layer dynamics, and technological commoditization is reshaping the value proposition of L1 tokens.

Strategic Moats in L1s: A Fractured Defense

Strategic moats-sustainable competitive advantages-have historically underpinned the value of L1 tokens. However, 2025 data reveals significant vulnerabilities. For instance, Polkadot's decentralized architecture, while innovative, has led to usability challenges and a lack of centralized ecosystem support. Developers and users report frustrations with the Polkadot-JS interface and the absence of proactive guidance, contrasting sharply with Solana's hands-on developer support. This highlights a critical trade-off: decentralization often comes at the cost of user experience and operational efficiency, weakening the moat against more user-friendly alternatives.

Ethereum, despite its dominance in total value locked (TVL) at 16.63 billion as of November 2025, faces its own challenges. Its role is evolving from a monolithic settlement layer to a modular data-availability and security backbone. While this positions Ethereum as a foundational asset, it also dilutes its direct value capture. Critics argue that L1s struggle to exhibit compounding value, as user growth reduces friction rather than amplifying network effects according to analysis. This dynamic is exacerbated by L2s, which now process over 1.9 million daily transactions-far outpacing Ethereum's 15–30 TPS-while handling 65% of new smart contracts according to statistics.

L2s: The New Infrastructure Powerhouses

Layer 2 solutions have emerged as the de facto infrastructure for scalability and cost efficiency. Arbitrum, for example, leads the L2 TVL segment with a 51% market share, while stablecoin transactions on L2s grew by 54% year-over-year according to data. These networks leverage innovations like Optimistic Rollups and ZK-Rollups to achieve throughput rates exceeding 10,000 TPS, with gas fees reduced by up to 90% compared to L1s according to industry reports. This has enabled enterprises to deploy real-world use cases, from tokenized real estate to cross-border payments, with unprecedented efficiency.

Investor positioning reflects this shift. L2 tokens like Arbitrum (ARB) and Optimism (OP) have attracted over $10 billion in Q2 2025 alone, with Arbitrum securing $6.2 billion in TVL according to market analysis. In contrast, L1 tokens are increasingly viewed as long-term infrastructure assets rather than high-growth plays. While Ethereum's Fusaka upgrade aims to enhance throughput and node efficiency, its underperformance relative to Bitcoin has sparked debates about whether L2s are diluting its economic thesis according to research.

Commoditization and the Erosion of L1 Value

The commoditization of blockchain infrastructure further undermines L1 token value. As AI-integrated solutions and tokenized real-world assets (RWAs) proliferate, the differentiation between L1s narrows. For example, AI-driven smart contracts and decentralized compute platforms are automating financial services, reducing reliance on L1-specific innovations. Similarly, RWA tokenization is unlocking liquidity in traditional markets, diminishing the unique value of L1 tokens as settlement layers.

Regulatory clarity has also accelerated commoditization. Governments introduced 50+ new blockchain regulations in 2025, addressing bridging risks and data availability on L2s. This has bolstered institutional confidence in L2s, which now handle 70% of stablecoin transaction volumes according to statistics. Meanwhile, L1s face scrutiny over scalability and centralization risks, with 30% of L2 projects actively working to mitigate sequencer centralization according to industry data.

Investor Positioning: A Shift to L2-Centric Strategies

Investors are increasingly adopting a multi-layer approach, balancing core holdings in L1s with rotational exposure to L2s. This strategy capitalizes on L1s' security and neutrality while leveraging L2s' scalability and growth potential according to market analysis. For instance, Ethereum-based L2s like Base and zkSync appeal to retail and enterprise users with their low fees and high throughput according to industry reports. Conversely, L1s like Solana and TON are carving niche markets by prioritizing speed and user experience.

However, the long-term outlook for L1 tokens remains uncertain. As L2s handle more transactions and governance functions, L1s risk becoming mere settlement layers with limited value accrual. This is particularly evident in the debate over Ethereum's role: while it retains institutional adoption, its ability to scale effectively is questioned.

Conclusion

The commoditization of blockchain infrastructure and the rise of L2 solutions are reshaping the strategic moats of L1 tokens. While L1s like Ethereum and Solana retain foundational roles, their token value is increasingly contingent on their ability to adapt to a modular ecosystem. Investors must navigate this shift by prioritizing L2s for scalability and growth while maintaining exposure to L1s as long-term infrastructure assets. In 2025, the blockchain landscape is defined not by a zero-sum competition between L1s and L2s but by a coexistence where each layer addresses distinct user needs. For L1 tokens to retain relevance, they must evolve beyond their current paradigms and demonstrate sustainable value capture in an increasingly commoditized world.