Ethereum L1 Revival: DeFi Giants Return as L2s Save Millions

The Ethereum ecosystem is witnessing a significant consolidation trend where both high-value DeFi projects and alternative Layer 1 blockchains are increasingly aligning with Ethereum’s mainnet and Layer 2 solutions. In recent months, a raft of alt-L1s have joined Ethereum to become L2s, while other projects on L2s are switching back to the Ethereum mainnet. This dual migration pattern represents a fundamental shift in the blockchain landscape, with Ethereum reasserting its claim as the home of high-value decentralized finance.

High-value DeFi projects like Synthetix (SNX) and Aave (AAVE) are making Ethereum L1 great again, according to industry observers. These protocols, which represent some of the most significant value in the decentralized finance space, are reinforcing Ethereum’s position as the dominant smart contract platform. The trend is particularly noteworthy given that Ethereum L1 now commands seven times more Total Value Locked than its nearest competitor, demonstrating the network’s enduring appeal for high-stakes financial applications.

The movement toward Ethereum’s Layer 2 solutions is being driven by compelling economic incentives and strategic advantages. The L2 model offers millions in potential savings, along with network effects for alt-L1s that join the ecosystem. This combination of financial efficiency and enhanced connectivity is proving irresistible for projects seeking to optimize their operations while maintaining blockchain independence.

Celo’s transition to an Ethereum L2 provides a compelling case study in cost efficiency. Back in March, when bearishness around the extractive L2 roadmap was at its peak, the mobile payments network quietly closed down its validator network to become an L2. This strategic move is now saving the project almost $7 million a year in operating costs, demonstrating the substantial financial benefits available through L2 integration. The savings represent a significant reduction in overhead while maintaining the project’s core functionality and user experience.

Beyond immediate cost savings, the L2 model offers enhanced network effects that are difficult to replicate on isolated blockchain networks. By integrating with Ethereum’s ecosystem, projects gain access to a broader user base, deeper liquidity pools, and established infrastructure. This connectivity advantage is particularly valuable for DeFi protocols where network effects directly translate to improved functionality and user adoption.

One of the most symbolic migrations involves blockchain gaming L1 Ronin (RON), which announced in August that it was coming home to Ethereum in early 2026. This represents a full-circle moment for the platform, coming five years after network congestion forced its popular game Axie Infinity off the mainnet. The return signals both Ethereum’s improved scalability and the enduring value of its ecosystem for high-traffic applications.

Jeffrey Jiho Zirlin, co-founder of Sky Mavis, which built both the game and the alt-L1, noted that Ethereum has largely delivered on the scaling roadmap. This acknowledgment from a project that previously left Ethereum due to technical limitations underscores the significant progress the network has made in addressing its scalability challenges. The planned 2026 integration will bring one of blockchain gaming’s most successful projects back into the Ethereum fold as an L2 solution.

The current migration trend reflects Ethereum’s successful execution of its long-promised scaling solutions. After years of development and testing, the network’s Layer 2 ecosystem has matured to the point where it can support enterprise-level applications while maintaining the security and decentralization of the mainnet. This technical progress has transformed the economic calculus for projects considering their blockchain infrastructure.

Ethereum’s commanding lead in Total Value Locked—seven times more than its nearest competitor—provides compelling evidence of its reestablished dominance in the DeFi space. This metric, which measures the amount of cryptocurrency locked in decentralized finance protocols, serves as a key indicator of network health and user confidence. The substantial gap between Ethereum and competing networks suggests that the market continues to value the security and network effects of the established platform over the theoretical advantages of newer alternatives.

The convergence of high-value DeFi projects returning to L1 and alt-L1s migrating to L2 positions Ethereum as the central hub for blockchain innovation. This dual trend strengthens the network’s position while providing flexibility for projects with different technical and economic requirements. As the ecosystem continues to mature, this consolidation around Ethereum’s core infrastructure appears likely to accelerate, further cementing its position as the foundational layer for decentralized applications.