Arbitrum Steals Ethereum’s Lunch Money as Layer 2 Dominates Stablecoin Migration

Ethereum bleeds $374M in stablecoin outflows while Arbitrum emerges as the Layer 2 destination of choice—proof that even in crypto, high gas fees will make users vote with their wallets.

Wall Street analysts, meanwhile, are still trying to figure out if ’stablecoin’ is an oxymoron.

Ethereum bleeds value to layer 2 networks

Layer-2 networks like Arbitrum are designed to scale Ethereum by offloading transactions from the mainchain. Users benefit from lower fees while remaining within the Ethereum ecosystem. However, this scaling model has raised concerns among ETH holders, who fear too much value is being siphoned away from the Ethereum base layer.

While Arbitrum relies on Ethereum’s decentralization and security, it captures the bulk of the economic value from transaction processing and gas fees. In contrast, falling gas fee revenue on Ethereum is undermining the network’s deflationary supply model.

However, since the release of the Pectra Upgrade, the narrative on Ethereum is changing. For instance, Artemiy Parshakov, Vice President of Institutions at P2P.org, suggested that Ethereum should not be chasing short-term profitability.

Instead, he praised Ethereum’s long-term vision, emphasizing that cheaper transactions and greater efficiency are essential for building a sustainable ecosystem, one in which Arbitrum also plays a key role.