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Ethereum Emerges as the Foundation for Settlements as Layer 2 Solutions Drive the Next Wave of DeFi

Ethereum Emerges as the Foundation for Settlements as Layer 2 Solutions Drive the Next Wave of DeFi

Bitget-RWA2025/09/17 17:02
By:Coin World

- Ethereum’s DeFi activity increasingly shifts to L2s like Arbitrum and Base, which now hold $19.21B and $15B TVL respectively, surpassing mainnet. - Ethereum evolves into a "global settlement layer" for high-value transactions, while L2s handle everyday DeFi use cases via faster, cheaper execution. - L2s drive innovation (e.g., Uniswap V4 hooks) and attract liquidity providers, with Aave retaining 90% TVL on mainnet but Uniswap gradually migrating to L2s. - Vitalik Buterin’s "modular scaling" vision posit

The trajectory of Ethereum’s DeFi sector is increasingly influenced by the growth of its Layer 2 (L2) solutions, as both liquidity and innovation are progressively migrating to these secondary platforms. Data from early September 2025 shows networks like Arbitrum and Base have overtaken Ethereum’s mainnet in total value locked (TVL): Arbitrum sits at $19.21 billion, while Base has reached $15 billion. In contrast, DeFi activity on Ethereum’s mainnet has remained muted since its 2021 high, with gas fees totaling just $44 million in August 2025—a 44% drop from the previous month. This shift indicates that L2 networks are capturing a greater portion of DeFi engagement, largely due to their increased speed and reduced transaction fees.

AJ Warner, who serves as Chief Strategy Officer at Offchain Labs, points out that

is transforming into a "global settlement layer" rather than functioning as the exclusive execution environment for DeFi transactions. He compares this shift to the role of wire transfer systems in traditional finance—trusted and reliable for significant transactions—while Layer 2s address everyday, routine activities. This separation of functions is further demonstrated by Ethereum’s support for major institutional projects, such as tokenized funds from Franklin Templeton and BlackRock’s BUIDL initiative. Even as L2s gain momentum, Ethereum remains central for the security and reliability needed for large-scale financial operations.

The expansion of L2s is also spurring new developments in DeFi. Alice Hou from Messari observes that these secondary networks are becoming testing grounds for innovative features, such as

V4’s hooks, enabling developers to experiment and iterate affordably. Once these innovations are proven, they can be rolled out more broadly throughout the ecosystem. This adaptability is drawing in users who previously found it difficult to participate on Ethereum’s mainnet due to costs or limitations.

Liquidity providers are adjusting their strategies in response to these changing dynamics. Smaller providers increasingly prefer L2s for better yield opportunities, while larger players stay on Ethereum to benefit from its security and deeper liquidity pools. For instance,

retains 90% of its TVL on Ethereum, whereas Uniswap is gradually allocating more to L2s. This pattern highlights how different participants in the DeFi space are optimizing based on their individual priorities.

Ease of use is another reason L2 networks are gaining traction. Wallets, bridges, and fiat on-ramps are increasingly guiding newcomers toward L2s, enhancing their accessibility. By September 2025, about one-third of L2 TVL is sourced from Ethereum bridges, another third is natively created, and the rest arrives through external bridges. This distribution shows that while Ethereum continues to be a vital source of liquidity, L2s are simultaneously cultivating their own ecosystems and drawing assets from across different chains.

This broader transformation is redefining Ethereum’s place in the blockchain world. Rather than competing head-to-head with its L2s, Ethereum is evolving into a foundational settlement network, prioritizing security and decentralization. This shift aligns with Vitalik Buterin’s "modular scaling" approach, where L2s handle transaction processing while Ethereum focuses on consensus and finality. As a result, the future of DeFi appears to be a collaborative progression, with Ethereum and its L2s each serving unique and crucial functions.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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