2026 Layer 1 Outlook
Against a backdrop of broadly weak token performance in 2025, Layer 1 (L1) activity increasingly split across distinct roles and narratives. Speculative flows concentrated on a handful of high-throughput venues, while Ethereum deepened its position as a settlement and data availability hub through L2-driven growth and falling fees. Stablecoins cemented their status as the ecosystem’s killer use case, culminating in the launch of purpose-built “stablechains.” At the same time, privacy-focused, performance-optimized, and app chain-oriented L1s sharpened their value propositions, setting up a base layer that is more fragmented but explicitly specialized heading into the next cycle.Speculation Versus SettlementRetail demand for L1s in 2025 was still overwhelmingly driven by speculation, with the memecoin supercycle continuing to provide the clearest expression of that theme. High throughput, deep liquidity, and low fees made Solana and BNB Chain the natural venues to accommodate this flow. Across most of the year, Solana maintained a clear lead in L1 DEX volumes, only briefly ceding the top spot to BNB Chain in June and Ethereum in August.Source: The Block, DeFiLlamaThis dominance was heavily front-loaded. January marked an all-time high for Solana DEX volume, with the official $TRUMP and $MELANIA memes accounting for nearly half (~48.5%) of that activity. Pump.fun alone contributed around 23% of Solana’s YTD app revenue, turning launchpads into a core part of the network’s economics and reinforcing its reputation as a “casino chain.” As the year progressed and memecoin momentum faded, Solana’s DEX dominance gave way to a more balanced split with Ethereum and BNB Chain, highlighting the network’s dependence on a narrow set of meme catalysts.Source: The Block, DeFiLlamaEthereum told a different story. Its renewed share of DEX volume sat atop an already dominant DeFi base, with TVL peaking above $97.5 billion. However, even as monthly transactions on Ethereum reached all-time highs, a growing share of day-to-day activity occurred on Layer 2s, with Base alone processing more than 3.3 billion transactions YTD compared with roughly 473 million on mainnet. The Pectra hard fork reinforced this shift, bundling execution and consensus layer optimizations that further entrenched Ethereum’s rollup-centric roadmap. Over the same period, average mainnet transaction fees fell from around $7.25 on January 1 to lows near $0.19, levels not seen since early 2020, supporting mainnet’s standing as an ideal settlement and data availability layer.Meanwhile, BNB Chain’s resurgence combined technical upgrades with renewed cultural momentum. On the protocol side, the Lorentz and Maxwell hard forks cut block times from 3 seconds to 0.75 seconds, allowing the network to better absorb bursts of activity. On the cultural side, CZ’s presidential pardoning and declaration of a “BNB meme szn” helped redirect speculative energy toward four.meme, which ultimately accounted for roughly 21.8% of BNB Chain’s YTD app revenue. Around this speculative core, DeFi on BNB Chain consolidated toward more traditional projects, including YZi Labs-backed perpetuals exchange Aster, which was well-positioned to capture perp DEX mindshare, and Lista DAO, a staking and lending protocol that saw roughly 188% YTD TVL growth.Where BNB Chain distinguished itself most clearly was in stablecoin activity. On an adjusted basis, excluding bots and other artificially inflationary behavior, BNB Chain averaged more than 138 million stablecoin transfers per month. Two initiatives were especially important in driving this growth: the “0 Fee Carnival,” which enabled gasless transfers for leading stablecoins, and the BNB Chain-centric launch of World Liberty Financial’s USD1 in March. The latter effectively made BNB Chain the primary rail for a politically charged, multi-billion-dollar stablecoin, positioning it as a hybrid ecosystem where memes, leverage, and payments increasingly intersect.Source: The Block, ArtemisStablecoins Validate Product-Market FitStablecoins were one of 2025’s defining themes. More than $90 billion of net new issuance lifted the total stablecoin market cap by roughly 45%, an acceleration of about $18 billion over 2024’s growth. For L1s, this surge mapped closely onto the year’s dominant narratives: memecoins, perpetual futures, institutional adoption, and prediction markets.Source: The Block, DeFiLlamaIn percentage terms, Solana and Hyperliquid stood out as key beneficiaries. On Solana, stablecoin supply doubled in the first 23 days of the year as meme activity peaked, supported by roughly $4.5 billion in new USDC mints. Issuance slowed in subsequent months, but the network still recorded about 159% YTD growth, with PYUSD expanding to capture just over 7% of Solana’s stablecoin float. Hyperliquid had a slower start, but all-time high perp volumes in the second half of the year helped drive roughly 118% YTD growth in its stablecoin base, tying liquidity directly to derivatives activity.Aptos and Polygon followed a more institutional path, with stablecoin supply growing by about 142% and 76% YTD, respectively. On both chains, October deployments of around $500 million of BUIDL played an outsized role, accounting for about 57% of net new issuance on Aptos and roughly 40% on Polygon. Meanwhile, the increasing importance of prediction markets meant that a daily average of around 14% of Polygon’s USDC supply was locked in Polymarket contracts.Source: The Block, DeFiLlama, RWA.xyzThe proliferation of stablecoins spilled into network design itself through the emergence of stablecoin-centric L1s, or stablechains. These networks attracted more than $548 million of disclosed funding in 2025 on the promise of delivering purpose-built environments for stablecoin execution and settlement. Rather than competing on breadth of functionality, stablechains optimize around narrow but high-value use cases such as protocol-level compliance hooks, simplified fee models, or native onchain forex.Source: The Block, PlasmascanPlasma established itself as the early leader in this segment, ranking as the L1 with the eighth largest stablecoin supply less than three months after launch. Its adoption metrics have since fallen meaningfully from their initial peaks, with active addresses and transaction counts now a fraction of early post-launch levels. However, with Stable launching in early December, plus Circle’s Arc and Stripe/Paradigm’s Tempo still in testnet, it remains too early to tell whether stablechains can or will sustain durable, long-term use.Specialization at the Base LayerStablechains were only one expression of 2025’s broader shift toward specialized L1s. While newer networks may still offer general-purpose execution, they increasingly organize around a clear core differentiator, such as privacy, performance, or customizability. The result is a more segmented landscape in which users route activity through chains explicitly optimized for their specific needs.Within this shift, interest in the privacy narrative reached new highs. Monero, the long-time leader of privacy networks, became the center of controversy when Qubic, a “useful proof of work” chain, rapidly captured a large share of its hashrate, at times reportedly accounting for over half of total hashing power. Although Qubic framed its actions as benevolent, many observers viewed the episode as an economic attack, illustrating how an otherwise sovereign network can be repurposed as a captive yield engine by and for external actors.In the aftermath of Monero’s hashrate turmoil, Zcash emerged as an unexpected focal point in late 2025. After years of underperformance relative to both BTC and XMR, ZEC posted gains of roughly 661% YTD, briefly overtaking Monero by market capitalization, and forcing the industry to revisit long-standing assumptions about transparency, compliance, and privacy as a fundamental right. A key driver of Zcash’s revival was its full integration with NEAR Protocol’s cross-chain intents stack, which allows both retail and institutional users to "step off" a transparent chain, transact inside Zcash's shielded pools, and return without leaving an obvious trail. The integration coincided with a clear inflection in shielding behavior, with Zcash's shielded supply market share rising from roughly 9% in January to highs of almost 24% in November.Source: The Block, ZecHubZcash also provided a template for how privacy and compliance can coexist. While Zcash transactions are transparent by default, users can opt into fully encrypted transfers and selectively reveal details when required. This design pattern has begun to spread, with newer L1s like IOHK's Midnight Network and Digital Asset's Canton Network each implementing their own versions of selective disclosure. Together, these projects point to an emerging category of compliant privacy networks that preserve confidentiality without sacrificing auditability.Performance-focused L1s formed another pillar of specialization. These networks are designed to feel invisible to end users, targeting web2-level latency and trading experiences that can rival centralized exchanges. Monad led mindshare in this segment, with its promise of parallelized EVM execution finally materializing with mainnet launch in late November. Early onchain activity, however, remained modest relative to the months of anticipation, in part due to unfavorable market conditions at launch. Fogo pursued a similar goal with a different stack, using an SVM-based design, a Firedancer client, and a curated validator set to minimize latency. Both projects are still in early phases, but together they illustrate the ecosystem’s desire to close the performance gap between onchain and offchain trading.Parallel to these developments was the rise of app chain hubs as coordination layers for specialized L1s. On Avalanche, this took the form of an expanded subnet architecture that allows custom L1s to set their own specifications while still connecting back to the primary network for security and liquidity. Initia pushed the same concept in a rollup-based direction, combining a coordination layer with an “Interwoven” rollup stack for app-specific chains. In both cases, differentiated experiences are delivered by purpose-built environments that plug into a shared base rather than by fully standalone chains.Layer 1 Outlook For 2026The bar for relevance keeps rising, yet clean consolidation around a small set of networks still feels remote. Instead, the landscape is likely to keep fragmenting at the base layer, with niche, specialized chains cycling in and out of prominence. In this environment, interoperability and cross-chain communication become paramount. By abstracting away individual L1s and routing activity seamlessly, these systems can provide the consistent, intuitive user experiences needed for mainstream adoption.Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.