[DigitalToday reporter Chi-gyu Hwang (황치규)] Total value locked (TVL) on Ethereum layer2 networks has fallen back to about $5 billion for the first time since 2023.

The Block reported that the figure gives up most of the growth seen in 2024, when layer2s such as Optimism, Arbitrum and zkSync launched and drew attention.

Optimistic rollups such as Optimism, Base and Arbitrum still lead TVL, accounting for $4.8 billion, or 96 percent of the total.

The decline in TVL also coincides with weakness in Ethereum itself. The Ethereum Foundation has lost several senior leaders since the start of the year, including co-executive directors. There were also workforce reductions across the foundation.

The traditional finance industry, which had been expected to support the case for institutional adoption of Ethereum, is embracing other alternatives alongside Ethereum. DTCC is tokenising U.S. Treasuries based on a $100 trillion custody base, and JPMorgan has put JPM Coin on-chain across multiple public blockchains.

Stablecoins are the only exception. USDC and USDT are still settled mostly on Ethereum and layer2s, and thanks to stablecoins Ethereum has remained a key bridge between crypto and traditional finance so far, The Block reported.