Layer 1 Tokens Struggle with Validator Inflation Costs
Solana and Ethereum posted significant losses in 2025, according to data from Kaiko. Solana's network recorded $4.15 billion in net losses, while Ethereum lost $1.62 billion. Despite generating revenue through fees, both networks were outweighed by the cost of validator inflation.
The analysis found that most major Layer 1 blockchains have fee revenue far surpassed by token issuance costs to validators and stakers. Tron was an exception, producing $624 million in revenue and maintaining positive earnings.
Ethereum's economic model has shifted significantly following the Dencun upgrade, which redirected transaction demand to Layer 2 scaling systems. The report suggests that long-term sustainability of Layer 1 token economics may depend on transitioning validator rewards from inflation to revenue.