In a significant market shift, Coinbase's Layer 2 blockchain Base is experiencing a sharp reversal of capital flows, witnessing over $4.3 billion in outflows so far in 2025. This marks a dramatic turnaround from last year, when Base was one of the fastest-growing Layer 2 solutions, attracting $3.8 billion in net inflows in 2024. The shift reflects changing investor sentiment and a reallocation of assets back to Ethereum’s mainnet, which has seen a resurgence in capital inflows after a period of decline.
From Darling to Downtrend: Base's Capital Exodus
Base, which launched in 2023 with backing from Coinbase and built using the Optimism stack, had quickly emerged as a top Layer 2 solution. It attracted developers, users, and capital, buoyed by Coinbase’s brand, strong integrations, and an increasingly vibrant DeFi and NFT ecosystem.
However, in 2025, Base has seen its fortunes shift. According to data from blockchain analytics platform Artemis, Base has suffered a net capital outflow of $4.3 billion year-to-date. This places it as the hardest-hit Layer 2 in terms of capital movement, reversing nearly all of its gains from the prior year.
The primary driver of this outflow appears to be a significant liquidity withdrawal by Binance, one of the largest centralized crypto exchanges. Binance reportedly pulled substantial funds off the Base network and moved them back to Ethereum’s Layer 1. This move reduced the amount of ETH bridged to Base and contributed to declining liquidity and investor activity on the network.
Supporting this, data from L2BEAT shows that ETH locked on Base dropped sharply from around 1.82 million ETH to just 835,000 ETH over a few weeks. That's more than a 50% reduction in bridged Ethereum—a major blow for a network whose growth was largely reliant on assets being brought in via cross-chain bridges.
Moreover, the total stablecoin reserves on Base have plateaued at just over $4 billion since mid-May. While this may still seem like a robust figure, it’s indicative of stagnation when paired with declining transaction volumes and user activity across DeFi protocols.
Ethereum Reclaims Top Spot With $8.5 Billion in Inflows
While Base struggles to retain liquidity, Ethereum’s mainnet is surging back to the forefront, registering $8.5 billion in net inflows so far in 2025. That’s a striking turnaround from 2024, when Ethereum saw $7.4 billion in net outflows—a period when users and capital were rapidly migrating to faster, cheaper Layer 2 solutions and altchains.
Ethereum’s comeback highlights a renewed confidence among investors in the Layer 1 chain’s long-term stability, security, and ecosystem maturity. This reversal is seen as part of a broader trend where capital flows are consolidating into more established networks amid increasing regulatory scrutiny and market caution.
In recent months, Ethereum has also benefited from new Layer 2 architectures and rollup improvements that reduce congestion and fees on the base layer, allowing users to interact with the mainnet more efficiently. Institutional use of Ethereum has also grown, further boosting capital flows.
Layer 2 Networks in Flux
The shift in capital isn’t isolated to Base. Several other Layer 2 networks have seen similar declines in bridged assets. Networks like Arbitrum and Optimism have also experienced outflows, though not on the same scale as Base. The retreat of capital from Layer 2s appears to be tied to a broader market reassessment of risk, utility, and where meaningful yield or usage can be found.
It’s unclear if this trend marks a long-term contraction or a short-term rotation, but what’s evident is that Layer 2s—once hailed as the inevitable scaling solution for Ethereum—are facing growing pains. Liquidity is mobile, and it is increasingly being concentrated in fewer networks with strong utility, robust ecosystems, and regulatory clarity.
What's Next for Base?
Base still retains many advantages, including deep integration with Coinbase’s product suite, a large retail user base, and developer incentives. It also remains one of the most active chains by daily transactions, and its low fees make it attractive for consumer applications and social dApps.
However, regaining momentum may require new incentives, protocol upgrades, or strategic partnerships to re-attract liquidity. In a competitive Layer 2 landscape, standing still can mean falling behind.
Does Base's $4.3B outflow signal a broader loss of confidence in Layer 2 networks, or is this just a Binance-driven anomaly?