A major reshuffling is afoot in the decentralized finance (DeFi) world. Once unshakable as the foundation of DeFi activity, Ethereum is now seeing a sharp decline in usage as Layer 2 solutions like Base and Arbitrum take center stage.
With 60% of all DeFi transactions now taking place on Base, and Arbitrum facilitating around 25% of all decentralized exchange (DEX) activity, the trend points to a new generation of far more popular infrastructure leading the charge.
In contrast, Ethereum, which once commanded nearly all of the DeFi ecosystem, accounted for just 7% of DEX transactions as of April 7. The consistently falling transaction count on the Ethereum mainnet is becoming a clear indicator that cost and scalability concerns are pushing developers and users alike to move their activity to more suitable platforms without jeopardizing their DeFi creation and usage.
⚪️ #DeFi #Facts ⚪️
60% of all DeFi transactions now happen on #Base. #Arbitrum facilitates around 25% of DEX transactions. #Ethereum transaction counts have been consistently falling and accounted for just 7% of DEX transactions on April 7…👀😱#Crypto #ETH #ARB pic.twitter.com/ju4xBfiug3— All Facts Crypto (@AllFactsCrypto) April 14, 2025
New leaders bring new dynamics, and the data from these platforms paints a more intricate picture—one that shows a combination of growth and some growing pains.
Arbitrum’s Growing Influence… and Growing Pains
Even though Arbitrum is a major player in the current DEX activity — only behind Base — nearly all of its token holders are underwater. Blockchain analytics firm IntoTheBlock reports that a staggering 99% of Arbitrum holders are currently sitting on losses. The level of usage that Arbitrum has and the amount of institutional involvement that it seeps into makes this loss figure all the more dramatic.
🔻 99% of Arbitrum holders are at a loss.
🐋 Whale concentration: 77%
💸 $271M in large transactions (7d)
🌍 54% of activity from the WestIs this true capitulation…or the ultimate accumulation zone? 🤔 pic.twitter.com/otiPhiyv8H
— IT Tech (@IT_Tech_PL) April 13, 2025
Arbitrum’s landscape is dominated by whales. Approximately 77% of the total supply of tokens is held in large wallets, indicating a pronounced imbalance between major stakeholders and everyday users. This concentration of power among a handful of key players runs counter to the idea of decentralization for which Arbitrum was designed.
Institution or larger investor engagement with the protocol seems a safe bet, given that the past week’s total large transaction volume came in at $271 million.
Even with all these developments, though, cryptocurrency holders don’t seem likely to see their assets appreciate any time soon.
About 54% of the on-chain activity from Arbitrum interestingly comes from the West. This highlights a user base that is predominantly Western, and it may also indicate where retail sentiment is most intensely shifting.
Concentrating whales in crypto have been hitting record levels over the past year. Despite the sustained duration and amount of transactions, we’ve seen a massive drop in prices, rippling through both Bitcoin and Ethereum. No doubt this has led to some heavy losses for both retail and institutional investors. But as the above list shows, those losses have also translated into some heavy buying on the part of those same players — i.e., the insiders and the big players on the receiving end of those concentrated sell-offs.
Base Surges to the Top
As Arbitrum grapples with a worrisome drop-off in users and a seriously injured token price, Base — the Layer 2 developed by Coinbase — has surged ahead. Base now handles 60% of DeFi transaction volume. In just a few months, it has become the center for high-speed, low-cost activity — particularly for small-fry users who used to get priced out of Ethereum’s mainnet.
Base attracts developers and applications—a lot of them built around the high-speed, fast-moving world of meme coins and retail tokens. The low fees on Base and the seamless access to the Coinbase platform make it not just user-friendly but super viral among a diverse demographic of crypto users.
Consequently, Base’s traction is now exceeding that of Arbitrum and Ethereum together in terms of real on-chain transaction activity in DeFi. This is a significant metric that tends to lead to longer-term capital flows.
Still, Base is not without its challenges. Critics have raised concerns about centralization because it’s tied to Coinbase, and questions linger about long-term validator diversity and decentralization. But for now, those concerns seem to take a backseat to the appearance of success that the platform is projecting with massive user engagement and transaction counts.
The Bigger Picture
Ethereum is still shedding activity, but that seems to be okay with its creators and proponents as long as it’s happening in a way that seems planned. Still, rapid decentralization of influence in the DeFi ecosystem means the lion’s share of activity is now happening on Base and Arbitrum, not on the Ethereum mainnet itself, which seems to be shifting toward a role as a settlement layer rather than the execution engine it once was.
For Arbitrum, the data reveals a contradiction: robust platform adoption, but almost all its holders in the red. This could be an early signal that we are nearing the end of the crypto bear market and that the age of DeFi 2.0 is about to dawn. Investors and developers are waiting with bated breath to see what’s next for Arbitrum.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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