Ethereum (ETH) analysis: how L2 adoption is shifting activity away from mainnet this year

Explore why Ethereum Layer 2 solutions are drawing transactions off the mainnet, what it means for users and investors, and how tokenized real‑world assets fit into the evolving landscape.

• Layer 2 scaling is pulling a significant portion of Ethereum activity from the congested mainnet.
• The shift impacts transaction costs, user experience, and the growth of RWA tokenization.
• Understanding these dynamics helps investors spot opportunities in both L1 and L2 ecosystems.

In 2025, Ethereum remains the leading smart‑contract platform but faces growing pressure from its own scalability limits. Layer 2 (L2) solutions—rollups, sidechains, and state channels—have matured enough to process billions of transactions at a fraction of the cost of the mainnet.

For crypto‑intermediate retail investors, this migration is more than a technical footnote; it reshapes where value is created and how real‑world assets (RWAs) are tokenized on Ethereum. The question is: what does L2 adoption mean for Ethereum’s future, its users’ costs, and the broader Web3 economy?

In this deep‑dive we examine the mechanics of L2 scaling, quantify its impact on network activity, explore real‑world use cases like tokenized luxury real estate, assess regulatory risks, and outline scenarios for 2025 and beyond. By the end you’ll have a clear picture of how Layer 2 is shifting Ethereum’s ecosystem.

Background / Context

Ethereum’s architecture was designed to support decentralized applications (dApps) on a single, globally replicated ledger—its mainnet. While this model guarantees security and censorship resistance, it also limits throughput: the network processes roughly 15–30 transactions per second (tps), leading to high gas fees during congestion.

Layer 2 scaling emerged as a pragmatic solution. By bundling multiple on‑chain actions into a single, compressed proof sent back to mainnet, L2s can process thousands of tps at near-zero cost. The most prominent L2 families are:

• Optimistic Rollups (e.g., Arbitrum, Optimism) assume transactions are valid and only verify them on dispute.
• Zero‑Knowledge (ZK) Rollups (e.g., zkSync, StarkNet) generate cryptographic proofs that all state transitions are correct.
State Channels for off‑chain micropayments with final settlement on mainnet.

In 2024 and early 2025, L2 adoption accelerated thanks to:

• Major dApps (DeFi protocols, NFT marketplaces) opening their bridges.
• Institutional interest in low‑cost transaction pathways.
• Ethereum’s own roadmap toward a full merge into proof‑of‑stake and eventual sharding.

These forces have led to a measurable migration of activity from the mainnet to L2s, reshaping Ethereum’s value proposition for developers and investors alike.

How It Works

The transition from on‑chain to off‑chain involves several core steps:

1. Transaction Submission: A user sends a transaction to an L2 operator (e.g., Arbitrum, zkSync).
2. State Update & Rollup: The operator aggregates multiple transactions into a batch and creates a concise commitment or proof.
3. On‑Chain Settlement: The bundle is posted on Ethereum mainnet. For rollups, only the final state root or ZK proof is recorded.
4. Optional: Users can withdraw funds back to the mainnet when needed, incurring a final gas fee.

Roles in this ecosystem:

• Issuers/Developers: Build dApps on L2 and provide bridges for token transfers.
• Validators/Ops: Run nodes that execute L2 logic and submit proofs.
• Custodians: For RWA tokens, SPVs or legal entities hold the underlying asset.
Investors: Hold ERC‑20 tokens representing fractional ownership of an off‑chain asset; they receive income via smart contracts.

The key benefit is a dramatic reduction in per‑transaction cost: while mainnet fees can reach $100+ during congestion, L2 fees often stay below $0.50. This unlocks micro‑transactions and high‑frequency trading that would otherwise be economically infeasible.

Market Impact & Use Cases

The migration to Layer 2 has already spurred several real‑world applications:

• DeFi Protocols: Compound, Aave, and SushiSwap have launched L2 versions, offering lower borrowing costs.
• NFT Marketplaces: OpenSea’s “OpenSea 2.0” leverages Arbitrum for cheaper minting and trading.
Tokenized Real‑World Assets: Platforms like Eden RWA issue ERC‑20 tokens backed by tangible luxury real estate, enabling fractional ownership with L2 efficiency.

For investors, the upside lies in:

• Lower Transaction Costs: More frequent trades and liquidity provision become viable.
Higher Throughput: dApps can scale to millions of users without bottlenecking the network. Improved User Experience: Faster confirmation times enhance adoption among non‑technical users.

A comparative snapshot:

Risks, Regulation & Challenges

While L2 offers clear benefits, several risks merit attention:

• Smart Contract Risk: Bugs in rollup operators or bridge contracts can lead to fund loss.
• Custody & Legal Ownership: RWAs rely on SPVs; legal clarity varies across jurisdictions.
• Liquidity Fragmentation: Assets split between L1 and multiple L2s may dilute market depth.
Regulatory Uncertainty: The SEC, MiCA (EU), and national regulators are still defining the status of tokenized securities and cross‑border transfers. KYC/AML Requirements: Some L2 operators may enforce stricter identity checks to comply with evolving regulations.

Potential negative scenarios include:

• A major rollup fails, causing a loss of user funds and eroding trust in the entire L2 ecosystem.
• Regulators classify tokenized real‑world assets as securities requiring registration, increasing compliance costs.
• Mainnet congestion spikes unexpectedly, forcing users back to expensive L1 transactions.

Outlook & Scenarios for 2025+

Bullish scenario: Ethereum fully merges into proof‑of‑stake and begins shard deployment. Layer 2 ecosystems mature with interoperable bridges, leading to a near‑zero gas fee environment. Tokenized RWA platforms like Eden RWA thrive as institutional investors flock to low‑cost, liquid real‑asset tokens.

Bearish scenario: A significant rollup collapse and regulatory clampdown on tokenized securities stall L2 growth. Mainnet congestion increases as users revert to L1, driving up fees again. Token holders face liquidity freezes.

Base case (12–24 months): Layer 2 adoption continues steadily at 25‑30% of total Ethereum activity, driven by DeFi and NFT use cases. RWA platforms maintain modest growth; their secondary markets remain illiquid but show signs of early demand from accredited investors.

For retail investors, the key takeaway is to monitor transaction fee trends, bridge adoption rates, and regulatory developments in both L1 and L2 spaces. For builders, ensuring cross‑chain compatibility and robust legal frameworks will be essential.

Eden RWA: Tokenizing French Caribbean Luxury Real Estate

Eden RWA exemplifies how Layer 2 can empower real‑world asset tokenization while keeping costs low. The platform issues ERC‑20 tokens that represent indirect shares of a dedicated SPV (SCI/SAS) owning luxury villas in Saint‑Barthélemy, Saint‑Martin, Guadeloupe, and Martinique.

Key mechanics:

• Token Structure: Each villa has its own ERC‑20 token (e.g., STB‑VILLA‑01). Tokens are minted on Ethereum mainnet but most transactions occur on a Layer 2 rollup to minimize gas.
• Income Distribution: Rental income is paid in USDC and automatically distributed to token holders via smart contracts. The process runs entirely on-chain, ensuring transparency.
• Experiential Incentives: Quarterly, a randomly selected token holder receives a free week’s stay at the villa they partially own, adding utility beyond passive income.
• Governance: A DAO‑light structure lets holders vote on major decisions—renovations, sale timing, usage policies—while keeping operational efficiency high.
• Secondary Market: Eden plans a compliant secondary marketplace to enable liquidity for token holders once regulatory approval is obtained.

This model showcases how L2 can reduce transaction friction for RWAs while maintaining the security guarantees of Ethereum. It also demonstrates that real‑asset platforms can offer both yield and experiential value, appealing to a broader investor base.

Interested readers may explore Eden RWA’s presale for more information on tokenomics and participation details:

Eden RWA Presale | Presale Platform

Practical Takeaways

• Track the proportion of Ethereum transactions on L1 vs L2; a rising L2 share signals cost efficiency.
• Monitor gas fee trends—low fees may indicate healthy rollup activity and lower risk for DeFi users.
• Check bridge liquidity; insufficient cross‑chain liquidity can create slippage problems.
• For RWA tokens, verify the legal entity (SPV) structure and jurisdictional compliance status.
• Consider governance models—DAO‑light systems often balance decentralization with operational speed.
• Stay informed about regulatory updates from the SEC, MiCA, and local regulators affecting tokenized securities.
• Assess secondary market plans; liquidity is a critical factor for exit strategy.
• Use Layer 2-compatible wallets (MetaMask, WalletConnect) that support rollup networks to reduce transaction friction.

Mini FAQ

What is the difference between Optimistic and ZK rollups?

Optimistic rollups assume transactions are valid and only verify them if challenged, which can delay finality. ZK rollups generate cryptographic proofs that all state changes are correct, enabling instant finality but requiring more computational resources.

Can I move my RWA tokens between L1 and L2?

Yes—most platforms provide bridges that allow you to lock tokens on L1 and mint wrapped versions on an L2 rollup, then reverse the process when needed.

Are tokenized real‑world assets considered securities?

In many jurisdictions, if the asset provides a profit share or passive income, it may be classified as a security. Platforms like Eden RWA work within regulatory frameworks to ensure compliance.

What risks are unique to L2 solutions compared to L1?

L2 introduces operator risk (a bug in the rollup node could affect funds) and potential fragmentation of liquidity across multiple chains, which can lead to higher slippage.

How does Eden RWA handle regulatory compliance?

Eden structures each property through a dedicated SPV registered under French law, uses audited smart contracts for distribution, and plans a compliant secondary market once the legal framework permits.

Conclusion

The migration of Ethereum activity to Layer 2 solutions is reshaping the ecosystem’s economics. Lower gas fees, higher throughput, and improved user experience are making L2 an attractive environment not only for DeFi and NFT projects but also for tokenizing tangible assets like luxury real estate.

Platforms such as Eden RWA demonstrate that Layer 2 can bridge the gap between blockchain efficiency and real‑world asset ownership, providing investors with yield opportunities while maintaining security and transparency. However, as adoption grows, so do regulatory and operational risks that must be carefully managed.

For retail investors, staying informed about fee dynamics, bridge liquidity, and legal developments will help navigate this evolving landscape. For builders, focusing on cross‑chain interoperability, robust smart‑contract auditing, and clear governance structures will be key to success.

Disclaimer

This article is for informational purposes only and does not constitute investment, legal, or tax advice. Always do your own research before making financial decisions.