Layer 1 Tokens Experience Significant Decline in 2025: SOL and AVAX Lose Over 65%

In 2025, Layer 1 blockchain tokens faced a steep depreciation, with some major assets plummeting by as much as 73% in value. This downturn occurred despite ongoing developer engagement, as highlighted in the latest Year-End report by OAK Research.

Key Takeaways

Layer 1 tokens experienced declines of up to 73% in 2025, while Bitcoin remained relatively stable.
User activity fell significantly, with major chains losing 25.15% of Monthly Active Users.
Only a handful of tokens, like BNB and TRX, posted positive price movements, while others faced catastrophic losses.
Developer activity remained robust, but there is a growing disconnect between development and token prices.
The focus has shifted to revenue-generating protocols, with stablecoin issuers dominating the income landscape.

L1 Tokens Crushed in 2025 as SOL, AVAX Drop Over 65%: Report

While Bitcoin showed relative resilience, other Layer 1 tokens endured intense sell-offs that revealed weaknesses in their tokenomics and market strategies. The report indicates a significant shift from speculative trading to focusing on fundamental value, punishing protocols that failed to demonstrate real economic activity.

L1 Tokens 2025 - performance chart

User Reallocation Indicates Market Stagnation

The findings reveal a notable user redistribution over overall growth, with an impressive 25.15% decline in Monthly Active Users across leading blockchains, according to the blockchain metrics in the report.

Solana experienced the sharpest fall, with almost 94 million users lost (over 60%), while BNB Chain saw an almost tripling of its user base by attracting departing participants.

Layer 2 networks also displayed contrasting performance. Base emerged as a leader, with a 37.2% increase in Total Value Locked (TVL), reaching $4.41 billion, as it leveraged Coinbase’s distribution advantages. In contrast, Optimism's TVL contracted by 63%, dropping from nearly $2 billion to $786 million as capital shifted towards more competitive options.

L1 Tokens 2025 - l2 performance chart

Token Performance Reflects Harsh Market Reality

The price movements painted a harsh picture. Among the main Layer 1 tokens tracked since January, only two ended the year in the green:

BNB: up 18.2%
TRX: up 9.8%

In stark contrast, other tokens faced significant declines, with Solana down 35.9% and newer tokens like TON and AVAX plummeting over 67%.

Layer 2 tokens fared even worse, despite advancements.

The report documents that Optimism and zkSync Era both suffered declines greater than 84%, while Polygon and Arbitrum saw drops of more than 73%. Only Mantle posted a slight gain of 8.3%, attributed more to concentrated supply control than to any fundamental strength.

Several key factors converged to drive this decline:

Overleveraged tokenomics featuring persistent unlock schedules.
Absence of credible mechanisms to link network usage with token demand.
Preference among institutions for Bitcoin and Ethereum over smaller-cap alternatives.

Developer Engagement Remains High Despite Price Declines

Despite the decline in token prices, developer activity remained strong across select ecosystems, as indicated by data from Electric Capital included in the report.

The Ethereum Virtual Machine (EVM) stack continued to host the largest developer community, comprising 17,473 contributors (as of the latest update), including 5,405 full-time developers, representing over 32% of the overall activity.

Bitcoin recorded the most significant two-year jump in full-time developers among major ecosystems, growing by 90.5% to a total of 1,003 contributors.

L1 Tokens 2025 - Ecosystem Active Developers Table

Solana and the broader SVM stack showed a 75.8% growth over two years, accumulating 4,578 full-time developers, underscoring ongoing technical ambition despite disappointing token performance.

Although overall developer activity increased, a disconnect between activity and token prices highlighted what the report refers to as “market maturation.”

L1 Tokens 2025 - Total Dev Stats

Development teams continued building even during downturns, but speculative capital no longer favored infrastructure without clear paths to generating revenue.

Revenue Becomes Critical for Survival

The unmistakable lesson of 2025, as concluded in the report’s economic analysis, is that protocols lacking credible revenue streams risk fading away.

The industry has shifted toward the “revenue meta,” where tangible cash flows have taken precedence over mere narratives.

Notably, stablecoin issuers generated the majority of revenue, accounting for 76% of the income among leading protocols. Tether and Circle combined produced $9.8 billion annually, while derivatives platforms like Hyperliquid contributed an additional $1.1 billion via sustainable fee-based strategies.

L1 Tokens 2025 - Top revenues by protocol and categories 2025 chart

The report also pointed out a trying reality for generic Layer 1 and 2 projects lacking unique features; they are currently unable to compete effectively. Networks now require tenfold improvements in speed, cost, or security to maintain their viability.

Challenges Ahead for the Future

As we look towards 2026, infrastructure tokens are expected to confront ongoing challenges, despite clearer regulatory guidelines in key markets, according to the report’s conclusions.

The combination of aggressive inflation schedules, insufficient demand for governance rights, and concentrated value capture at foundational layers indicates a trend toward further consolidation.

Sentiment in the altcoin market as we approach 2026 remains wary, particularly following an unprecedented decline.

L1 Tokens 2025 - Altcoin and Berachain downtrend chart

While protocols that create meaningful revenue may find stability, they will still be influenced by Bitcoin’s volatility and the ongoing pressure from early investors’ unlock schedules.

For existing Layer 1 tokens, the report suggests that their survival hinges on the performance of Ethereum and Solana, and that a resurgence in institutional interest could offer a glimmer of hope.

Without direction from leading market players, generic infrastructure tokens are likely to fade into obscurity as investment concentrates on protocols that deliver genuine economic value rather than just technological innovation.