What exactly is driving the value of Layer 1?

A CFA-led regression study of major Layer 1 assets found that short-term price moves are still dominated by bitcoin beta, while long-term valuations track capital attraction rather than on-chain activity. Ethereum’s trailing 12-month real protocol revenue fell 60% from the Dencun upgrade week to August 2025, yet its market cap rose over the same period, a deliberate policy outcome of cheaper blobspace and higher gas limits rather than collapsing demand. Solana’s revenue and market cap moved in lockstep, both rising about 15x from January 2023 and peaking in the same week before falling in tandem. Active addresses showed weak weekly correlation with market cap, and fitted Metcalfe elasticities came in at 0.56 for Ethereum and 0.62 for Solana and BNB, closer to the square root of addresses than the square. No valuation multiple reliably mean-reverted, with market cap to protocol revenue the only one predicting 13-week forward returns from low percentiles on Ethereum and TRON. Ethereum’s pricing now anchors to peer capital share—59% of major L1 market cap, 53% of stablecoin supply, 70% of DeFi TVL and 75% of tokenized RWA—while holding just 5% of active addresses, leaving capital flows and stablecoin supply as the metrics to watch.