Layer 2 ecosystem saw mixed momentum through 2025, with total value locked expanding but distribution highly concentrated. Base dominated the flow of new capital into the L2 space, while competitors faced headwinds—most other layer 2 solutions experienced either stagnation or capital outflows. The slowdown correlates directly with the drying up of incentive programs that previously attracted liquidity, highlighting how dependent some L2s remain on subsidies rather than organic user demand.