In April 2026, Ethereum (ETH) traded at $2,361.86, up 2.28% over 24 hours, with a total market capitalization of approximately $275.69 billion and a market share of 10.41%. Over the past year, the ETH price surged about 41.53%, climbing from around $1,691 to its current level. The approval of spot ETH ETFs and ongoing institutional inflows have provided fundamental support for this growth. In the past 24 hours, trading volume reached approximately $267 million, with a high of $2,379.03 and a low of $2,284.54.
However, beneath these price movements lies a more profound structural shift: Ethereum’s mainnet is undergoing "de-execution." As of early 2026, over 95% of transaction execution within the Ethereum ecosystem has migrated to Layer 2 networks, officially relegating the mainnet to a "global settlement layer." Yet, the market’s understanding of this functional transformation remains lagging. Even as global financial giants like BlackRock, JPMorgan, and Goldman Sachs gradually move trillions of dollars in assets to Layer 2 networks such as Base and Arbitrum, mainstream narratives still focus on ETH price and gas fee revenue, rather than addressing a more fundamental question: Why is the settlement infrastructure value of L2s so severely undervalued?
Institutional Migration Wave: L2 Becomes the New Settlement Layer for Capital Titans
Since late 2025, a series of landmark events have propelled L2 networks to the forefront of institutional finance.
In December 2025, JPMorgan migrated its deposit token JPMD from an internal testnet to Base (an Ethereum L2 operated by Coinbase), marking the first time a systemically important institution brought real bank deposits into a public blockchain settlement system. Mastercard, Coinbase, and B2C2 were among the first institutional partners to participate in real-time transactions.
BlackRock, meanwhile, has expanded its flagship tokenized money market fund, BUIDL (with assets of approximately $2.52 billion), to several L2 networks, including Arbitrum, Polygon, and Optimism. In February 2026, BUIDL further enabled on-chain trading via UniswapX, with BlackRock making a strategic investment in UNI tokens—marking the first time a traditional asset management giant has held a DeFi governance token on its balance sheet.
In February 2026, Arbitrum announced a partnership with Goldman Sachs to jointly explore institutional-grade blockchain settlement solutions, elevating Arbitrum’s institutional strategy to a new level.
At the same time, Citibank, Vantage Bank, and Custodia Bank all launched bank-backed tokenized USD deposit products on Ethereum and L2 networks. Custodia Bank founder and CEO Caitlin Long stated in an interview that they chose Ethereum because "it’s the most battle-tested platform for smart contracts," and its degree of decentralization is a key risk factor banks must consider.
These events are not isolated. Together, they signal a clear trend: institutions are systematically shifting their choice of blockchain settlement infrastructure from the mainnet to L2.
Infrastructure Upgrade Timeline: The Evolution from Dencun to BPO2
Technical Starting Point: Dencun Ushers in the Era of Low Costs
The explosive growth of Ethereum’s L2 ecosystem began with the Dencun upgrade in March 2024. This upgrade introduced EIP-4844 (proto-danksharding), creating a dedicated data availability layer ("blob space") for rollups and slashing L2 data publishing costs by about 99%. This directly propelled L2 daily transaction volumes to several times those of L1 activity.
On January 7, 2026, Ethereum implemented the BPO2 upgrade at epoch 419,072, raising the per-block blob limit from 10 to 14 and the maximum blob cap from 15 to 21, increasing data capacity by roughly 40% and further reducing L2 settlement costs.
Key Institutional Entry Timeline
Below is a chronological summary of major institutional moves on Ethereum L2:
| Date | Institution | Event |
|---|---|---|
| Mar 2024 | Ethereum Network | Dencun upgrade introduces EIP-4844, L2 fees drop ~99% |
| Dec 2025 | JPMorgan | JPMD deposit token goes live on Base for real-time operations |
| Jan 2026 | Ethereum Network | BPO2 upgrade increases blob capacity by 40% |
| Jan 2026 | BlackRock, JPMorgan, Fidelity, etc. | 35 top financial institutions launch tokenized products on Ethereum and L2 |
| Feb 2026 | BlackRock | BUIDL fund enables on-chain trading via UniswapX; BlackRock acquires UNI tokens |
| Feb 2026 | Goldman Sachs | Partners with Arbitrum to explore blockchain settlement solutions |
| Mar 2026 | Arbitrum | Publishes 2025 transparency report; TVL reaches $20 billion |
Structural Divergence Between Network Activity and Price
A notable fact: Ethereum’s on-chain activity hit record highs in Q1 2026. In Q1, base layer transaction volume surpassed 200 million, up 43% year-over-year, mainly driven by L2 networks like Base and Arbitrum batching transactions for settlement on the mainnet. Meanwhile, ETH’s price remained about 60% below its all-time high of $4,946.05.
The core reason for this divergence: L2s pay only minimal settlement costs to L1, with most economic value captured at the execution layer (L2) rather than the settlement layer (L1). This means the traditional "gas fee pricing" model is obsolete, and ETH’s value anchor must shift from fee income to "monetary premium as a global settlement layer"—a transformation the market has yet to fully absorb.
On-Chain Data Insights: L2 Revenue Surpasses Mainnet, Dual-Oligopoly Takes Shape
TVL’s Absolute Dominance
As of March 2026, Ethereum mainnet’s TVL stood at approximately $52.4 billion, accounting for 57% of all blockchain TVL. Including L2 networks such as Base, Arbitrum, Polygon, and Optimism, this share rises to 65%. By comparison, Solana’s TVL was $6.4 billion and BNB Chain’s was $5.5 billion.
Within the L2 ecosystem, the market has formed a highly concentrated "dual-oligopoly." Base holds about 46.6% of L2 DeFi TVL, while Arbitrum commands over 31%, together controlling more than 75% of total L2 value locked. Base’s TVL peaked at around $5.6 billion in 2025 and reached about $4.2 billion in March 2026, up 49.5% year-over-year. Arbitrum’s 2025 transparency report showed ecosystem TVL at $20 billion, with cumulative transaction volume reaching 2.1 billion and network uptime exceeding 99.8%.
L2 Revenue Has Surpassed the Mainnet
Even more noteworthy is the migration of revenue. Data from April 2026 shows that Base generated roughly three times the protocol revenue of Ethereum mainnet over the past 30 days. During the same period, the mainnet generated about $10.3 million in transaction fees, ranking behind Tron and Solana.
This trend confirms a structural shift: L2’s scale and institutional adoption have entered a self-reinforcing positive feedback loop—lower costs attract more users, more users drive more revenue, increased revenue attracts higher-quality applications and liquidity, and this, in turn, draws even larger institutional capital.
Capital Is Structurally Migrating from Mainnet to L2
On-chain active address data shows that as of April 2026, Ethereum had over 788,000 daily active addresses, with smart contract calls exceeding 40 million. However, the growth in active addresses is primarily happening at the L2 level. Gate Research’s April 2026 analysis notes that in February, Base and Polygon continued to expand their active address base, while Arbitrum saw a recovery in activity but lacked strong user retention. The Ethereum mainnet, meanwhile, has maintained its settlement role.
It is reasonable to infer that institutional capital is following a "validate models in L2’s low-cost environment, then gradually scale up" approach, and L2 infrastructure has now matured enough to support this migration at scale.
Industry Perspectives: Oligopoly Formation and the Debate on ETH Value Capture
Ethereum L2 as the "Execution Layer Gateway" for Institutional Finance
In an April 2026 analysis, Real Vision CEO Raoul Pal argued that Ethereum will become the core infrastructure of the banking system within the next 12 to 18 months, with top institutions expected to migrate clearing, custody, and settlement functions to the Ethereum network. The L2 ecosystem is seen as the key driver of this shift, with rollup solutions offering high throughput and low costs while inheriting Ethereum’s security guarantees.
This view is backed by institutional actions. Over 30 banks—including Bank of America, Citi, TD Bank, and Wells Fargo—are working with SWIFT to develop a cross-border transaction platform based on Ethereum. Bis Chatterjee, Citi’s Global Head of Partnerships and Innovation, noted that Ethereum’s "standardization" enables system scalability and flexible integration with external systems.
The L2 Market Is Concentrating into an Oligopoly
A 21Shares research report at the end of 2025 predicted that most Ethereum L2 networks may not survive beyond 2026, with Base, Arbitrum, and Optimism set to dominate the market. Smaller rollups, due to declining usage, are becoming "zombie chains." This prediction is now being validated by data: Base and Arbitrum together account for over 75% of L2 TVL and handle nearly 90% of L2 transactions.
L2s Dilute ETH’s Value Capture
BlackRock’s 2026 thematic outlook positions Ethereum as core financial infrastructure but also points out that L2s like Arbitrum and Base, while settling under Ethereum’s security, pay only minimal fees to the mainnet, potentially diluting ETH’s fee capture capability.
The heart of this debate lies in the evolution of ETH’s pricing model. As L1 cedes execution revenue to L2, ETH’s value support shifts from "fee burn" to "settlement finality"—that is, global, censorship-resistant guarantees. L2s provide efficiency but cannot deliver L1-level finality and censorship resistance. Trillions in institutional assets won’t be deployed on chains where a single sequencer can freeze or roll back transactions. L1’s core product is not low fees, but certainty.
Far-Reaching Impact: Settlement Efficiency, Liquidity, and Market Share Reshaping
The institutional adoption of L2 settlement infrastructure has produced verifiable impacts across three dimensions:
Settlement Efficiency. The integration of BlackRock’s tokenized assets with L2 networks has reduced institutional settlement times from T+2 days to just seconds, while maintaining whitelist access controls within compliance frameworks.
Liquidity Structure. According to Circle, as of March 2026, 35% of all USDC stablecoin transfers occurred on L2 networks, a more than fourfold increase from 8% at the start of 2024. This indicates a structural migration of user activity from the mainnet to L2.
Market Share. The combined Ethereum + L2 ecosystem accounts for 65% of blockchain TVL market share and holds a 68% share in the tokenized real-world assets (RWA) sector.
The following impacts are reasonable projections based on current trends:
- L2s are poised to evolve from the current "execution layer" into a "bridging layer" connecting traditional finance with on-chain finance. BlackRock’s BUIDL enabling trading via UniswapX is a landmark example—traditional yield-bearing assets now interact seamlessly with DeFi liquidity pools on L2.
- The dual-oligopoly of Base and Arbitrum may become even more entrenched. The 21Shares report forecasts further market consolidation around three networks—Base, Arbitrum, and Optimism—and once network effects are established, the barrier for new entrants will rise exponentially.
- The maturity of the L2 ecosystem will force further evolution of Ethereum mainnet’s value capture mechanisms. The current blob market pricing means L2s pay only minimal settlement costs. How to ensure L1 captures fair settlement value while maintaining L2’s low-cost advantage is a core governance challenge for the Ethereum community.
If current trends persist, by the end of 2026, the total scale of institutional-grade products (including deposit tokens, tokenized government bonds, and money market funds) running on L2 networks could reach hundreds of billions of dollars. This projection is grounded in the fact that JPMorgan alone has a deposit base of $2.406 trillion; even a small portion migrating to L2 settlement would far surpass the current on-chain RWA market, which is only in the tens of billions.
Conclusion
The institutional adoption of Ethereum Layer 2 is no longer a theoretical trend—it is an ongoing structural reality. From BlackRock’s deep BUIDL fund integration on Arbitrum, to JPMorgan’s real-time JPMD settlement on Base, to Goldman Sachs’ partnership with Arbitrum, L2 settlement infrastructure is becoming the critical hub connecting global financial capital with native blockchain liquidity.
Yet, the market’s pricing logic has yet to fully reflect this transformation. With L2 revenue now outpacing the mainnet, 75% of L2 TVL concentrated in Base and Arbitrum, and 35% of stablecoin transfers already migrated to L2, the revaluation of L2 settlement infrastructure is just beginning. For those focused on the long-term evolution of the crypto industry, understanding the deep logic behind institutions choosing L2 over the mainnet may be the key to unlocking the next wave of value migration.
