Why L2 Token Price Lags Behind TVL?
A strange market phenomenon is Layer 2 Total Value Locked(TVL) skyrockets, daily active users surge, yet governance tokens price drop or stagnate. Why does the network succeed while the token fails?
🔸 The Utility Problem
On Layer 1 like Ethereum, Solana, you MUST buy the native token ETH, SOL to pay gas for every action. Demand rises directly with network usage.
On Layer 2, gas is still paid in ETH. The project is token often has only one function is Governance voting. It is not essential for the network to operate.
🔸 Most L2s launch with low Circulating Supply but extremely high Fully Diluted Valuation (FDV).
🔸 Aggressive unlock schedules for the team and VCs create constant selling pressure, while there is no natural buy demand from actual users.
🔹 Do not conflate technological success with token value. A Layer 2 might process billions in transactions, but its token could be economically worthless without a Revenue Sharing or Burn mechanism.
