RON Token Slides Amid Layer 2 Infrastructure Growth and Tokenomics Challenges

Ronin (RON) has seen a decline in recent weeks amid broader challenges facing Layer 2 (L2) tokens. While L2 networks like Arbitrum and Base show strong infrastructure growth, token performance often lags. RON's struggles highlight a broader issue where transaction volume and user activity do not directly translate into token value appreciation.

Layer 2 platforms now process over five times the transaction volume of Ethereum, with more than 10 million weekly active addresses. Arbitrum leads the market with $16.7 billion in TVL, followed closely by Base at $12.5 billion. Despite this, most L2 tokens, including RON, fail to capture the economic value of the networks they support. Revenue from transactions is often denominated in ETH rather than native tokens, creating a misalignment in value capture.

How Do Layer 2 Tokens Struggle With Value Capture?

Layer 2 tokens often suffer from weak tokenomics, including high inflation rates and centralized sequencer operations. For RON, this means the token is not effectively capturing the value of the underlying infrastructure. In the case of Ronin, post-airdrop activity has declined sharply, raising concerns about the quality of growth and the sustainability of token value.

What Are the Key Risks to L2 Token Viability? L2 tokens face a variety of risks, including regulatory uncertainty and competition from dominant platforms like Arbitrum and Base. Ronin also contends with the broader challenge of aligning token economics with infrastructure success. Decentralization of sequencers and improved fee models are crucial for RON and similar tokens to create long-term value for holders.

Investors should monitor metrics such as TVL composition, fee generation, and developer retention to assess the long-term sustainability of L2 tokens like RON. The path forward requires credible value capture mechanisms and a clear vision for decentralized governance.