Will 2025’s L1s and L2s Outperform, or Repeat 2024’s Underperformance?

As the AI agent narrative winds down, the crypto market is shifting its focus to the next speculative frontier. One area drawing attention is the upcoming launch of alternative Layer 1s and Layer 2s expected in early 2025. Projects like Berachain, MegaETH, and Monad are among the most anticipated, each introducing new execution environments that aim to attract users and liquidity. However, whether these chains will succeed where others have struggled remains uncertain.

The enthusiasm surrounding these new chains comes with a degree of skepticism, particularly in light of the performance of similar projects launched in 2024. To say these earlier L1 and L2 projects underperformed might be an understatement. Of the notable launches, Hyperliquid is the only project that delivered positive returns post-TGE. In contrast, zkSync, the next best performer, is down roughly 47% since its TGE in June, while tokens like Blast, Mode, and Starknet have each depreciated by over 70%. This widespread underperformance suggests that the initial excitement around new execution environments hasn’t translated into lasting market interest or user adoption.

Adding to the concerns, many of these chains have experienced significant declines in TVL after their token launches. This indicates not only weak token demand but also challenges in attracting and retaining users and liquidity. For instance, Scroll and Blast have both seen their TVL drop by more than 80% since their respective TGEs. Across the board, the 2024 launches have largely failed to capture sustained attention.

Hyperliquid, however, stands as an exception. Both its token price and TVL have increased by over 280% and 115%, respectively, post-TGE. This suggests that while the broader market has been cautious about new L1s and L2s, there is potential for specific projects to generate structural demand if they offer compelling fundamentals and user engagement.

As the next round of chains prepares to launch in Q1, the key question is whether they can outperform both fundamentally and in token price, or if they will follow the same trajectory as many of their 2024 counterparts.