The cryptocurrency industry is at a pivotal juncture, with L1 blockchains like Bitcoin, Ethereum, Cardano, and all others experiencing stagnation in user activity despite prevailing bullish market conditions. While investors may rejoice, the situation is starting to get serious from a long-term economic sustainability perspective. Let’s examine the history of L1s’ use and the reasons for their current low user interest in L1 transactions. The Number of Users of L1s Is Stagnating Across the Industry Bitcoin currently has the same number of people using it as it did at its peak in 2017, based on daily transactions. User activity was higher in 2023 and 2024 due to the Bitcoin NFT mania. It seems to have died down. Bitcoin recently reached a new high in terms of user activity, but it seems to have been a short-term blip. People are currently using Ethereum at a similar rate to the peak in 2017. The highest user activity occurred briefly around 2021. Since then, activity has been relatively flat. Despite this, the Ethereum ecosystem boasts around 200 TPS. It processes over 17M transactions per day. However, users do not use Ethereum, but mostly many L2s. 40% of the activity is on Base, an L2 built by Coinbase. Only 5% of the user activity is on Ethereum. Binance chain was heavily used between 2020 and 2021. Since then, the number of transactions has remained at a similar level. In the last 3 years, the Binance chain has not recorded a new high in terms of the number of daily transactions. The only exception is Solana, which has shown consistent growth in user activity from 2020 up to the present. User activity peaked in early 2025. However, this growth is not necessarily cause for celebration, as it has been largely fueled by meme mania, which has even drawn the attention of the presidents of the USA and Argentina. While the graph clearly illustrates this growth, the current level of activity has merely returned to its peak in 2021. Many blockchain metrics can be manipulated, so Solana may be facing the same challenges as other chains in this regard. Cardano had the most user activity around 2021. It has been approximately the same for the last 4 years. Let’s examine the approximate daily transaction volumes for various blockchains: Ethereum processes around 1.1 million transactions per day. Bitcoin handles approximately 300,000 transactions per day. BNB processes about 4 million transactions daily. Cardano handles roughly 100,000 transactions per day. According to the graph, Solana processes an impressive 50 million transactions daily. However, the actual number of meaningful transactions—excluding failed or bot-generated ones—is likely much lower. Accurately estimating the number of genuine Solana users is challenging. The user base might fall somewhere between Ethereum's Layer 1 user count and a smaller number than Base's users. From the perspective of long-term sustainability, the sheer volume of daily transactions is less significant than the quality and purpose of those transactions. It is their nature that truly matters. We Need Transactions With Real Utility Meme and NFT mania transactions are less significant compared to stablecoins, RWAs, DeFi, and similar innovations. The underlying issue is the lack of organic growth—everything revolves around speculation. During a bull market, as the value of L1 coins rises, speculators flood in, blindly trading memes and NFTs. However, once the hype and FOMO subside, interest in using L1s rapidly diminishes. This pattern repeats across all chains. In every bull market, a different platform emerges as the temporary winner. For instance, Ethereum dominated in 2017 due to the ICO craze, Binance Chain and L2s took the spotlight around 2021, and now Solana seems to lead. Even Bitcoin experienced a brief NFT frenzy through Ordinals. The crux of the issue lies in the transient nature of speculative interest. Speculators are not loyal to any platform and simply follow the next wave of opportunities, whether on L1s or L2s. No blockchain can sustain long-term user engagement as activity inevitably fluctuates, leaving those expecting constant growth disappointed. The Situation Of the Described L1s Is Different Bitcoin is grappling with major challenges in its economic and technical framework. Its reliance on costly proof-of-work consensus means that, as block rewards continue to halve over the next 3 to 5 halvings, transaction fees will need to account for a larger share of miners' revenue to maintain network security. However, users are hesitant to pay high fees for slow transaction speeds. The limited adoption of the Lightning Network exacerbates the issue, as it fails to generate enough transaction volume to make opening and closing LN channels viable. If fees do not start to form a significant part of the rewards for miners in the next 3 to 5 halvings, the security of Bitcoin may be at risk. Meanwhile, Ethereum faces a unique paradox. Its L2 ecosystem is thriving, achieving impressive activity levels of 200 TPS and reflecting robust user engagement with a clear upward trajectory. Yet, this success largely bypasses Ethereum's L1, which struggles to benefit directly from the ecosystem's growth. Furthermore, ETH has recently become inflationary, with the rate of newly minted tokens exceeding the amount burned, reaching a new low in the volume of ETH burned. Although Ethereum's ecosystem exhibits stronger user activity and growth compared to Bitcoin, both networks confront significant hurdles in optimizing their structures and economic models for sustained development and security. The highest user activity is currently observed on Base, developed by Coinbase. Base adopted a business model similar to Binance's, effectively attracting users who previously engaged with the Binance chain. At present, Base and Solana see the most user activity. DeFi on Cardano is relatively new, and the ecosystem faces challenges such as low scalability and the lack of L2s. So far, it has not experienced a significant wave of user interest in areas like NFTs or meme-driven trends. Some view this lack of meme mania on Cardano as a positive, arguing that it helps avoid the potentially detrimental effects such trends have on cryptocurrency adoption. Cardano is not perceived as a ‘CrimeFi’ platform. However, if Cardano had undergone a similar trend, it might be more appealing to users looking for mature and serious DeFi services. When it comes to fees, Cardano struggles to compete with Base and Solana. While fees on Solana can spike during periods of high demand, they are typically lower than Cardano's fees for most transactions. Economic Incentives Are Unfriendly to L1s Fees on L2s will always be lower than those on L1. Similarly, transaction finality will consistently be faster on L2. On-chain services are inherently more expensive than off-chain ones because decentralization comes with higher costs. It is impractical for L1s to compete economically with L2s, as they cannot outmatch them in this regard. Users tend to prioritize low fees and an optimal user experience. Most are unwilling to pay a premium for decentralization. This reality poses challenges for the long-term economic sustainability of blockchain networks. The Path for Cardano Cardano has multiple potential directions for growth. It could focus on competing with Solana in terms of TPS through advancements like Ouroboros Leios, or it could develop a robust L2 ecosystem using solutions like Hydra, Midgard, and others. Encouragingly, Cardano is pursuing both paths simultaneously, which is a promising strategy. The first path—competing with Solana—is advantageous because it keeps user activity concentrated on L1. However, this would require overcoming significant technological challenges, especially when competing against other L1s that prioritize scalability over decentralization. The second path—building a strong L2 ecosystem—appears more attainable but comes with risks similar to Ethereum. It can be challenging for Cardano to retain value within its L1 when much of the activity occurs on L2s, which some perceive as parasitic networks to a certain extent. It is unclear whether a monolithic approach like Solana's or a rich L2 ecosystem like Ethereum's will prove more successful. In the short term, the latter seems more likely to gain traction. Regardless, the blockchain industry must attract a significantly larger user base to succeed. Activity cannot vanish during bear markets, and utility must become enduring and genuine. When the industry achieves 1,000 or even 10,000 TPS, Cardano will need to capture at least a 10% market share to remain competitive. This goal is still within reach under the right circumstances. To attract new users, Cardano must match or exceed the level of user convenience offered by its competitors. Scalability is the key to achieving this. Cardano's strengths in security and decentralization could ultimately set it apart. These features might be decisive factors, as meme speculators and traditional finance (TradFi) users have different levels of risk tolerance. If Cardano can significantly improve its scalability within the next 2–3 years, it has the potential to become an integral part of the financial system's foundation.
