Ethereum’s Layer 2 (L2) solutions, like Arbitrum and Optimism, address scalability by enabling faster, cheaper transactions while leveraging Ethereum’s security. In 2025, the Dencun upgrade and rising L2 adoption could drive significant growth. Total Value Locked (TVL) in L2s has already surpassed $36 billion, with Arbitrum holding over 50% market share. As DeFi and NFT applications expand, L2 tokens like ARB and OP may see increased demand. However, competition among L2s and regulatory uncertainties pose risks. Investors should focus on projects with strong developer ecosystems and interoperability features.