$ETH is losing narrative strength as Layer 2 fragmentation keeps expanding across the ecosystem.
User activity is increasingly concentrating into a small group of dominant L2s like Base and Arbitrum, while a large portion of other Layer 2 projects continues to lose traction and value. This shift highlights how scaling layers are evolving into independent execution environments, gradually pushing Ethereum toward the role of settlement and security infrastructure rather than the main activity layer.
At the same time, external competition is intensifying. Ecosystems like $BNB Chain and Solana are attracting liquidity, users, and developer attention with faster execution and lower costs. As value and activity spread across multiple layers and competing chains, direct value capture for $ETH becomes less straightforward, which continues to reshape how the market structurally prices Ethereum.
