The Ideal Endgame: When the Crypto Industry Becomes Homogenized

Author: @100y_eth, FourPillars

Compiled by: Saoirse, Foresight News

The Majority of Crypto Idealism Experiments Have Come to an End

"Decentralization," read-write-own, Web3, community ownership, can't be evil, network states, code is law, don't trust—verify, creator economy, pluralism, future governance...

These concepts have long ceased to be mere technical terms. They attracted a large number of idealistic practitioners into the blockchain industry, all believing they could build a more open, free, and fair digital world.

Everyone's vision for the future differs, but there is a consensus within the industry: blockchain has the ability to reshape the existing order. Countless practitioners have devoted themselves to this, putting ideals into practice, spawning a large number of experiments, protocols, and services, with the ecosystem's boundaries continuously expanding outward:

DAOs, fan tokens, ve (3,3), NFTs, intellectual property NFTs, music NFTs, Bitcoin inscriptions and runes, Bitcoin Layer 2 networks, Play-to-Earn (P2E), Move-to-Earn, the metaverse, fully on-chain games, gaming guilds, decentralized social, decentralized identity (DID), on-chain reputation, soulbound tokens (SBT), algorithmic stablecoins, restaking, InfoFi, Ethereum killers, app chains, modular blockchains, zkEVM, Rollup-as-a-Service, intent trading, chain abstraction, DePIN, decentralized energy, regenerative finance (ReFi), decentralized science (DeSci), data markets, decentralized AI compute...

But regrettably, the vast majority of these experiments have failed. The number of failed projects is numerous; below are some representative cases.

Bitcoin Ecosystem

This chart shows Bitcoin network fee trends from 2023 to 2026. Fees spiked multiple times during the inscription craze, but after 2025 they fell back, and the network congestion caused by inscriptions has largely subsided.

Inscriptions, Ordinal NFTs, and Runes leveraged Bitcoin's SegWit, OP_RETURN, and other transaction fields to store arbitrary data. The market at the time touted that Bitcoin could also issue tokens and NFTs, and the hype remained high for a while. In 2023, inscriptions drove up Bitcoin network fees, and some even argued that inscription-generated fees could offset the shortfall from Bitcoin's block reward halving. But today, their impact on Bitcoin network fees is almost negligible. The once-leading Ordinal NFT project Ordinal Maxi Biz had a peak floor price of 1.5 BTC, but recent transaction prices are only around 0.018 BTC. Magic Eden, once the largest Bitcoin NFT trading platform, ceased Bitcoin NFT trading operations in March of this year.

Bitcoin Layer 2 networks: Technologies like Taproot and BitVM led the market to widely believe that programmable, scalable Layer 2 networks could be built atop Bitcoin, the most secure blockchain, and many projects secured funding from top venture firms. But today, the overall ecosystem performance is dismal. BOB, the Bitcoin Layer 2 project with the highest total value locked, has seen its TVL plummet 96.6% from its peak, leaving only $9.24 million. Corn, BEVM, and Lorenzo have completed full pivots, while Botanix has shut down entirely.

Layer 1 and Layer 2 Blockchains

Comparing the TVL share of Ethereum and other blockchains from 2021 to 2026, despite the continuous rise of multiple competing chains, Ethereum still maintains the highest share of total DeFi value locked, and the industry's dominant structure has not been broken.

A large number of emerging Layer 1 and Layer 2 networks claimed they could comprehensively surpass Ethereum in scalability, incentive mechanisms, contract security, and market operations. But many projects never found product-market fit and became "ghost chains" with no real users. Apart from BNB Chain, Tron, Solana, and Base, which accumulated real users and achieved viable business models, the vast majority of other chains have been unable to seize significant market share from Ethereum.

Infrastructure Sector

Modular blockchains were the hottest infrastructure sector in 2022-2023. Starting with the data availability (DA) layer, the market saw the emergence of shared sequencers, Rollup-as-a-Service, and various Rollup solutions. The design philosophy of modularity itself is not wrong—Arbitrum, Base, and Robinhood Chain continue to operate robustly. But most modular startups that gained high hype in that period either pivoted or shut down. That wave of modular hype can be considered a failed industry experiment.

The chart shows the total value locked (TVL) trend in the restaking sector from 2024 to 2026. The sector's TVL surged to a peak of nearly $30 billion before pulling back sharply, falling more dramatically than other DeFi segments.

Restaking refers to reusing tokens already staked on a PoS blockchain to provide economic security for other protocols. EigenLayer pioneered this sector, and subsequently Symbiotic, Karak, as well as Babylon and Solayer in other blockchain ecosystems, followed suit. The sector's total value locked peaked at $30 billion and has now fallen to around $8 billion. Although the locked volume remains substantial, the narrative has cooled significantly: there is a large supply of reusable security resources, but the business demand for that security is scarce. EigenLayer has softly pivoted to focus on EigenCloud for AI agents; Symbiotic has shifted toward high-performance blockchains, and Karak has transformed into a collateral trading platform.

Algorithmic Stablecoins

This chart shows the market cap trend of Terra UST from 2021 to 2026. UST's market cap once surged to nearly $20 billion before completely collapsing to zero, an event that made algorithmic stablecoins almost a forbidden zone in the crypto industry.

The goal of algorithmic stablecoins was to move away from full collateralization and create a more capital-efficient decentralized on-chain currency. Terra's UST (now USTC) is the most famous case, with circulating supply exceeding $18 billion at its peak and ranking among the top ten crypto assets. But external attacks combined with flaws in the underlying mechanism drove the token price to zero, dragging the entire Terra ecosystem into collapse. Other algorithmic stablecoin projects like FEI, IRON, and ESD also all failed. FRAX initially used an algorithmic mechanism but later adjusted to a fiat-collateralized model.

NFT, Blockchain Gaming, and Metaverse Ecosystems

The bar chart shows OpenSea's monthly trading volume trend. During the 2022 NFT craze, the platform's monthly volume once surged to nearly $5 billion, but after the hype faded, trading volume remained low for a long time, symbolizing that the NFT bull market was like a brief dream.

NFTs once broke into the mainstream. They emerged on Ethereum in 2021 and later spread to Solana and Klaytn ecosystems. Prices of top collections skyrocketed, then collectively crashed. CryptoPunks fell from 125 ETH to 32 ETH; BAYC from 150 ETH to 8 ETH; Pudgy Penguins from 35 ETH to 3.8 ETH; Azuki from 30 ETH to 0.8 ETH. OpenSea, the leading NFT platform, saw monthly trading volume shrink from a peak of $5 billion to about $30 million.

Play-to-Earn (P2E) centered on the idea that players own the in-game economy and can earn crypto assets by participating, sharing in the ecosystem's value. But to sustain the model, games must create real economic value or get players to pay voluntarily—neither of which was ever achieved, and most projects went bankrupt. Axie Infinity, which popularized P2E, had a peak of 6.5 million monthly active wallets and peak fees of $103.8 million; today it has fewer than 100,000 monthly active users and monthly fees under $50,000.

Alongside the P2E craze, land NFT metaverse projects like Sandbox and Decentraland also had their moment. Sandbox land NFT prices crashed 99%, from a peak of about $15,000 to $50. Move-to-earn projects like StepN and Sweat quickly faded. AAA blockchain games like Star Atlas and Otherside never officially launched; the concept of fully on-chain games never attracted a large base of ordinary users. The blockchain gaming sector, once seen as the future of the gaming industry, saw most of its experiments end in failure.

Decentralized Social and InfoFi

The chart shows Farcaster's daily active users and the volume of posts/interactions/links. After peaking in March 2026, the platform's daily active users and on-chain interactions have continued to decline, and market enthusiasm for decentralized social is gradually cooling.

Decentralized social is the most direct implementation of the "user-owned internet" vision. It promises users control over their social graph, permissionless access, and censorship resistance, giving rise to projects like Farcaster, Lens, and DeSo. But apart from short-term users brought by token incentives, projects struggle to retain real users, and overall activity has declined sharply.

InfoFi, pioneered by Kaito, binds network attention, content creation, and economic rewards. Early on it produced quality content, but later traffic-farming to extract rewards became rampant, and spam proliferated. After X shut down related APIs, Kaito's Yaps, Cookie DAO's Snaps, and Wallchain's Quacks all ceased operations.

The vision of crypto idealists has not materialized in the short term. But Bitcoin has been viewed by some in the market as digital gold; the traditional financial industry has also begun actively adopting blockchain as a new-generation financial infrastructure. Blockchain has finally found its own product-market fit.

The End of the On-Chain Experiment Era: Crypto Projects Shutting Down or Pivoting in 2026

The industry previously believed that the various idealistic experiments had largely ended in 2024-2025. The market shifted from grand narratives to sectors like stablecoins and asset tokenization that more easily achieve viable business models, and the ideals of the previous cycle gradually faded from public view.

But the reality continues to worsen: innovation had already stalled, capital and traffic began to withdraw, yet older projects could still limp along on remaining funding and business inertia. Recently, however, these older projects have met their true end, with many pivoting or shutting down outright.

As the table shows, in 2026, centralized exchanges, data tools, Layer 1s, Layer 2s, infrastructure, DeFi, gaming, and NFTs—nearly every sector—saw a wave of shutdowns and pivots. The idealistic experiments of the crypto world have truly come to an end this time. The digital world imagined by idealists never arrived.

The Market Forms a Barbell-Shaped Polarized Structure, and Sectors Converge

This scatter plot shows year-over-year changes in core metrics. The market is moving toward two extremes: speculative and traditional finance-linked RWA sectors are surging, while native on-chain DeFi, NFT, and restaking sectors are shrinking sharply, with middle sectors declining.

After the demise of countless on-chain experiments, the crypto industry has evolved into a polarized barbell structure. One end serves users' speculative demands; the other end serves stable business needs connected to the real economy.

Those native on-chain businesses in the middle, with ambiguous risk-return profiles, are showing dismal operating metrics, driven by three core reasons:

• Lack of product-market fit: As explained earlier, most on-chain products have not achieved PMF. Some cases that appeared to work were, in hindsight, merely false prosperity driven by early airdrop campaigns. Products that truly create value and continuously provide utility to users are extremely rare.
• Deteriorating risk-return profile: As crypto market conditions weaken, users are gradually distinguishing which models are viable and which are just fake demand. Expected yields from ordinary DeFi mining have fallen sharply. In the past, stablecoin mining could reliably achieve 15-20% annualized returns; today, even 5-10% annualized is hard to come by. The attractiveness of middle sectors has completely vanished. Users have split into two groups: either moving to RWA, accepting 3-7% low-risk returns, or flooding into meme coins, perpetual contracts, and prediction markets, taking high risks for outsized returns.
• Rising hacking risks: As large language model AI capabilities iterate and upgrade, on-chain hacking incidents are becoming more frequent. With expected yields already shrinking, the risk of losing principal further weakens the appeal of ordinary on-chain products.

Yet the metrics of sectors at the two extremes are rising against the trend, as if the bear market never arrived. Some businesses are highly tied to crypto market conditions; others have built independent business models unaffected by token price fluctuations. The entire industry has thus formed a barbell-shaped development pattern.

Speculative Demand Side

Speculation is not unique to the crypto industry. The objects of speculation change, but human nature remains the same. From tulip mania, land speculation, stocks, to cryptocurrencies, speculative demand has always existed. Smart contracts, on-chain transparency, and instant settlement make blockchain an excellent vehicle for speculation. After the appeal of ordinary DeFi declined, a large number of traditional DeFi users flooded into speculative sectors, with representative categories being meme coins, prediction markets, and decentralized perpetual contract DEXs.

Meme Coins

Market demand for meme coins has persisted since Dogecoin in 2013: DOGE→SHIB→BONK→PEPE. In 2024, Solana ecosystem tokens like WIF, POPCAT, MEW, GOAT, and FARTCOIN sparked a meme coin frenzy. What truly reshaped the industry landscape was the launch of shturl.c in 2024, allowing anyone to issue a meme coin with one click.

The bar chart shows shturl.c platform revenue trends. Despite overall market volatility, this meme coin issuance platform's revenue has remained high for a long time, and in August-September 2026 revenue surged past $2 million, reflecting the continued heat of the meme sector.

Spot DEX trading volume has plunged nearly 80% over the past year, but shturl.c's revenue resilience is extremely strong, with revenue doubling from its low point in the past month. The platform has a "graduation" mechanism: once a token's market cap reaches a threshold, it migrates from the bonding curve to an AMM liquidity pool. The proportion of tokens that successfully graduate has risen from an average of under 1% to over 3%.

Showing daily spot trading share in July, meme coins (bright yellow) had an extremely high share initially, and although it gradually declined, they remain the chain's primary trading category, exceeding the trading share of ETH-stablecoin and tokenized assets.

The newly launched Robinhood Chain was initially positioned as a real-world asset tokenization blockchain. But the vast majority of trading volume on the chain comes from meme coins. Blockworks statistics show that after launch, over half of spot trading volume was contributed by meme coins. Ironically, meme coins have become the growth engine of this RWA-focused chain.

This chart shows Fomo platform net revenue trends. Starting from June 2025, revenue exploded in the second half of 2026, confirming the rapid expansion of this meme trading platform.

Also worth noting is the Fomo platform, built by former dYdX employees. It has a low barrier to entry, allows quick discovery of meme coin projects, features a social feed, and supports Apple Pay. The platform's average daily revenue exceeds $400,000. shturl.c, Robinhood Chain, and Fomo all confirm one thing: regardless of bull or bear markets, demand for meme coins remains strong.

In the past, the barrier to participating in meme coins was high: you needed to scout opportunities on X and Telegram communities, check data on Dexscreener, connect your wallet to a DEX, and execute trades—participants were mostly insiders. Now, TikTok spreads meme culture everywhere, and apps support direct token purchases via Apple Pay. Ordinary users outside the crypto space can also enter easily. The decline in traditional DeFi yields combined with lower entry barriers has allowed meme coins to grow into a relatively independent sector less affected by overall market conditions.

Prediction Markets

Showing monthly trading volume in prediction markets, platforms like Kalshi and Polymarket drove scale from nearly negligible in 2024 to the $50 billion level by mid-2026, with explosive growth in the sector.

Over the past year, prediction markets have been one of the fastest-growing sectors: trading volume surged 3032% year-over-year, with a 320% increase within the year, and the growth momentum shows no signs of slowing. Valuations of leading platforms continue to rise: Kalshi was valued at $750,000 in 2019, and after multiple funding rounds, reached a $22 billion valuation in May 2026, with the next round targeting $40 billion. Polymarket's valuation rose from $18.58 million in 2020 to $15 billion, with a new round targeting over $20 billion.

The double donut chart compares the trading structures of Polymarket and Kalshi. Sports is the largest trading category for both; Polymarket has a higher share of crypto and political topics, while Kalshi's sports category accounts for 74.48%.

When the industry discusses prediction markets, it often mentions their ability to enable information discovery and risk hedging, but at this stage, real business demand for these two functions is very limited. Kalshi's trading volume mainly comes from sports events and crypto market movements; Polymarket covers a broader range of categories, but the main trading drivers remain sports, crypto assets, and political events.

Comparing open interest accumulation for sports and weather contracts of different cycles, weather contracts saw large positions built early, while sports contracts mostly saw rapid position buildup near expiration.

Comparing weather contracts and sports contracts reveals the difference: users of weather contracts open positions early, leaning toward hedging needs; sports contracts see large-scale trading concentrated near the event, essentially speculative behavior.

Prediction markets have been able to expand rapidly in a bear market largely because of the influx of many new users from outside crypto. Statistics show that 56.1% of wallet addresses on Polymarket have never interacted with a DEX. While this doesn't mean all are complete newcomers to crypto, a large number of users treat prediction markets as their first blockchain product. Sports and political hot events help platforms break out of the crypto cycle to acquire external incremental users.

Perpetual Contract DEXs

Comparing trading volumes of two types of DEXs, after 2025, perpetual DEX (blue) trading volume has consistently exceeded spot DEX (red), indicating significantly stronger demand for derivatives trading than spot.

Perpetual contract DEXs have not seen the explosive growth of meme coins or prediction markets, but in a bear market environment, compared to other on-chain data, their resilience is already outstanding. The decline in perpetual DEX trading volume is far smaller than that of spot DEXs, demonstrating that contract speculation demand is stronger than spot trading demand. This is driven by two main factors:

• New perpetual contract protocols continue to emerge: After Hyperliquid's success, new projects like Lighter, Aster, Variational, Grvt, and edgeX have launched one after another. Jito, Jupiter, and Ondo Finance, which originally had no contract offerings, have also added perpetual contract products. The market has formed a "use new protocols to earn airdrops" play, continuously bringing users into the sector.
• The rise of real-world asset perpetual contracts (RWA-Perps): In the past, contract underlying assets were limited to BTC and ETH. Driven by geopolitical conflicts and the AI sector rally, major platforms now list commodities and US stocks. For example, ordinary investors outside Korea find it difficult to trade SK Hynix stock, but they can trade the corresponding perpetual contract on Hyperliquid, which once had extremely high trading volume.

The concept of perpetual contracts originated with BitMEX. BitMEX's own business has declined to the brink of shutdown, but the perpetual contract sector continues to expand. Coinbase, Robinhood, Kalshi, as well as traditional compliant exchanges like the Singapore Exchange and US CME, have all begun to offer similar trading products.

The End Connected to the Real Economy

Market growth does not come solely from speculation. The other end of the barbell consists of sectors that are boring in model but stable in development, deeply tied to the real world. Stablecoins, RWA tokenization, and asset vaults continue to grow even as token prices and overall on-chain TVL decline.

Venture capital for native on-chain projects has seen a clear contraction in both the number of projects and funding size; but blockchain projects integrated with the real economy are seeing increasingly larger single-round funding amounts. For example, Rain's $250 million Series C, Airwallex's $320 million Series H, Gauntlet's $125 million round, and OpenFX's $94 million round. This proves that these sectors have achieved independent product-market fit, unconstrained by crypto bull and bear cycles.

Stablecoins

The white line represents stablecoin total market cap, which has remained roughly flat, but the stacked bars representing stablecoin payment transaction volume have continued to climb sharply, reflecting a shift in stablecoin usage toward actual payments.

Contrary to popular perception, total stablecoin supply grew only about 11% over the past year, and has been largely flat since October 2025. Treasury tokenization and private credit tokenization have expanded rapidly, while stablecoin supply growth has slowed.

But this does not mean the sector's development has stalled. In an environment of sharp market declines, holding existing volume is itself an achievement. More importantly, payment scenarios have exploded. Crypto payment cards like RedotPay, KAST, EtherFi, and Plasma One saw monthly payment volume nearly triple from $438.1 million in July 2025 to $1.32 billion in July 2026.

Stablecoins were initially just an intermediary medium for crypto trading, but they are increasingly being used in real-world payment scenarios. In the future, they will also serve as the core currency for on-chain settlement within the RWA tokenization system.

RWA

The total scale of real-world asset tokenization continues to rise, with traditional assets like US Treasuries and commodities being the main sources of growth, expanding independently of the crypto market cycle.

2025-2026 are breakout years for RWA. The market expects blockchain to transform outdated traditional financial infrastructure, with various real-world assets being brought on-chain. Early underlying assets were mainly US Treasuries and money market funds, with simple product forms and on-chain logic; later expanded to private credit, and recently further extended to stocks and equity categories.

The value logic of RWA underlying assets is independent of crypto market conditions. Leveraging efficiency improvements and lower participation barriers, it can grow independently of the crypto cycle. Four Pillars' previous reports have deeply analyzed the RWA sector, so this article will not elaborate further.

Asset Vaults

The line chart shows the TVL trend of selected vaults. After a pullback, it has rebounded again, approaching the previous historical peak, with institutional custody-type vault capital enthusiasm returning to high levels.

Vaults do not directly connect to real-world assets like RWA, but as a new generation of on-chain asset management modules, they have attracted significant industry attention. Vaults lend funds to lending markets that accept RWA as collateral, thereby indirectly connecting to the real economy.

As of Aug. 28, Bitcoin's price has fallen 35% from its high; yet the total value locked in selected vaults is only 4% below its historical high, proving that the vault ecosystem is also charting an independent course.

Early RWA efforts focused on "asset issuance on-chain"; now the industry is entering the asset application phase, with RWA collateralized lending emerging, which will further drive demand for vaults.

Why Crypto Companies Are No Longer Chasing Differentiation

The table lists the business layouts of major crypto platforms. △ indicates in development, ○ indicates a mature product, and - indicates not involved, reflecting the industry's expansion into emerging sectors like perpetual contracts, prediction markets, RWA, and stablecoins.

Thus, an intriguing business phenomenon has emerged in the crypto space: blockchain companies with completely different backgrounds and initial business positioning are now developing almost identical products and competing fiercely with each other. Platforms are launching perpetual contracts, prediction markets, supporting meme coin trading, and laying out stablecoins, RWA trading, and asset vaults.

The logic behind this is straightforward: as analyzed above, only a few sectors can both largely withstand market volatility and generate real business revenue. Even with the recent market recovery, the industry's overall direction has not changed, and a large number of crypto companies are flooding into these counter-cyclical sectors.

But this does not mean native on-chain projects have completely failed. As mentioned earlier, many experiments have died, but a few projects have survived and achieved product-market fit. EigenLayer still has a large amount of ETH participating in restaking; many are bearish on the blockchain gaming sector, but MapleStory Universe continues to deliver impressive metrics.

The on-chain ecosystem has formed a barbell-shaped structure. From a negative perspective: the industry has only a few sectors with growth potential; from a positive perspective: it represents a portion of crypto businesses maturing and finding their own business models. We look forward to more sectors reaching this stage in the future.