The End of Ideals: Why Is the Crypto Industry Collectively Heading Toward Homogenization?

Written by: 100y_eth

Translated by: Saoirse, Foresight News

The Majority of Crypto Idealist Experiments Have Come to an End

“Decentralization”, Read-Write-Own, Web3, Community Ownership, Immutability, Network State, Code is Law, Trustless Verification, Creator Economy, Pluralism, Future Governance…

These concepts have long transcended mere technical jargon. They attracted a large number of idealistic practitioners into the blockchain industry, who believed they could build a more open, free, and fair digital world.

Everyone has different visions for the future, but there is a consensus within the industry: blockchain has the power to reshape existing order. Countless practitioners have thrown themselves into this field, turning ideals into practice, spawning numerous experiments, protocols, and services, and continuously expanding the boundaries of the ecosystem:

DAO, fan tokens, ve(3,3), NFT, IP-NFT, Music NFT, Bitcoin inscriptions and runes, Bitcoin Layer 2, Play-to-Earn, Move-to-Earn, Metaverse, Fully On-Chain Games, Gaming Guilds, Decentralized Social, Decentralized Identity (DID), On-chain Reputation, Soulbound Token (SBT), Algorithmic Stablecoin, Restaking, InfoFi, Ethereum Killer, Appchains, Modular Blockchain, zkEVM, Rollup-as-a-Service, Intent-centric Trading, Chain Abstraction, DePIN, Decentralized Energy, Regen Finance (ReFi), Decentralized Science (DeSci), Data Marketplaces, Decentralized AI Computing Power…

Regrettably, however, the vast majority of these experiments have failed. The number of failed projects is enormous; below are some representative examples.

Bitcoin Ecosystem

This chart illustrates Bitcoin network fee trends from 2023 to 2026. During the inscription boom, fees surged repeatedly. After 2025, fees receded, and network congestion caused by inscriptions has largely subsided.

Inscriptions, Ordinal NFTs, and Runes store arbitrary data using Bitcoin script opcodes like OP_RETURN. At the time, the market hyped that Bitcoin could also issue tokens and NFTs, with related enthusiasm remaining exceptionally high. In 2023, inscriptions drove up Bitcoin network fees, leading some to argue that the fees generated could offset the shortfall from Bitcoin’s block reward halving. However, to date, their impact on network fees has become almost negligible. The once-top-tier Ordinal NFT project Ordinal Maxi Biz saw its floor price peak at 1.5 BTC, with recent transactions closing at only around 0.018 BTC. Magic Eden, once the largest Bitcoin NFT marketplace, ceased all Bitcoin NFT trading operations in March of this year.

Bitcoin Layer 2 Networks: Technologies such as Taproot and BitVM led the market to believe that programmable, scalable Layer 2 networks could be built atop Bitcoin, the most secure blockchain. Consequently, many projects secured funding from top-tier venture capital firms. Yet today, the overall ecosystem performance remains dismal. BOB, the highest-locked Bitcoin L2, saw its Total Value Locked (TVL) plummet by 96.6% from its peak, leaving only $9.24 million. Corn, BEVM, and Lorenzo have completed thorough pivots, while Botanix shut down entirely.

L1 and L2 Public Blockchains

Comparing the TVL share between Ethereum and other public chains from 2021 to 2026, despite the continuous rise of competing chains, Ethereum still maintains the highest share of total DeFi TVL, indicating that the industry’s dominant landscape has not been disrupted.

Countless emerging L1s and L2s publicly claimed they could comprehensively surpass Ethereum in scalability, incentive mechanisms, smart contract security, and market operation strategies. However, many projects never found product-market fit (PMF), devolving into “ghost chains” devoid of real users. Aside from BNB Chain, Tron, Solana, and Base—which accumulated genuine user bases and established closed-loop business models—the overwhelming majority of other public chains failed to capture significant market share from Ethereum.

Infrastructure Track

Modular Blockchains were the hottest infrastructure track in 2022–2023. Starting from Data Availability (DA) layers, the market saw the emergence of shared sequencers, Rollup-as-a-Service, and various custom Rollup solutions. The underlying design philosophy of modularity was not flawed; Arbitrum, Base, and Robinhood Chain continue to operate robustly to this day. Yet, the vast majority of highly-publicized modular startups from that era either pivoted or went bankrupt outright. That wave of modular hype can be considered an industry experiment that has already failed.

This chart shows the TVL trend in the Restaking sector from 2024 to 2026. The sector’s locked scale peaked near $30 billion before experiencing a sharp drawdown, declining more severely than other DeFi segments.

Restaking refers to the repeated utilization of tokens already staked on PoS public chains to provide economic security assurances for other protocols. EigenLayer pioneered this track, followed by Symbiotic, Karak, and ecosystem plays like Babylon and Solayer across various chains. The sector’s TVL reached a peak of $30 billion but has since retreated to approximately $8 billion. While the lock-in volume remains substantial, the associated narrative has significantly cooled: the market holds abundant reusable security resources, yet real business demand requiring such assurance is highly scarce. EigenLayer has softly pivoted to focus on AI agents via EigenCloud; Symbiotic shifted toward high-performance L1s, and Karak transformed into a collateral trading platform.

Algorithmic Stablecoins

This graph illustrates the market cap trend of Terra UST from 2021 to 2026. UST’s market cap once surged near $20 billion before completely collapsing to zero, an event that nearly turned algorithmic stablecoins into a taboo topic within the crypto industry.

The goal of algorithmic stablecoins was to decouple from fully collateralized assets and create decentralized on-chain currencies with higher capital efficiency. UST (now USTC) on the Terra ecosystem was the most famous case, with a circulating supply peaking at over $18 billion and ranking among the top ten crypto assets. However, external attacks compounded by fundamental flaws in its mechanism design caused the token’s price to crash to zero, dragging down the entire Terra ecosystem. Other algorithmic stablecoin projects like FEI, IRON, and ESD also met complete failure. FRAX initially utilized an algorithmic mechanism but later transitioned to a fiat-collateralized model.

NFT, GameFi, and Metaverse Ecosystem

This bar chart displays OpenSea’s monthly trading volume trends. During the 2022 NFT boom, the platform’s monthly volume once surged near $5 billion. After the hype faded, trading volume remained at low levels for an extended period, symbolizing how the NFT bull run was akin to a fleeting dream.

NFTs once broke out into mainstream visibility. Emerging on Ethereum in 2021, they subsequently spread to Solana and Klaytn ecosystems. Top collection prices skyrocketed before suffering a collective crash. CryptoPunks fell from 125 ETH to 32 ETH; BAYC dropped from 150 ETH to 8 ETH; Pudgy Penguins declined from 35 ETH to 3.8 ETH; Azuki tumbled from 30 ETH to 0.8 ETH. Leading NFT platform OpenSea’s monthly trading volume shrank from a peak of $5 billion to approximately $30 million.

Play-to-Earn (P2E), centered on the core concept that players own the in-game economic system and earn crypto assets while playing to share in ecosystem value. To maintain sustainability, games must generate genuine economic value or incentivize voluntary player spending—both of which were never fully realized, leading the vast majority of projects to bankruptcy. Axie Infinity, which ignited the P2E craze, peaked at 6.5 million monthly active wallets and $103.8 million in fees; today, MAUs fall short of 100,000 with monthly fees dropping below $50,000.

Riding the P2E wave, land-based metaverse projects like The Sandbox and Decentraland briefly gained massive popularity. Sandbox land NFT prices crashed 99%, plummeting from a peak of ~$15,000 to $50. Move-to-Earn projects like Stepn and Sweat lost their traction quickly. 3A-grade chain games such as Star Atlas and Otherside never officially launched, and the concept of fully on-chain games consistently failed to attract mass mainstream adoption. Once viewed as the future of gaming, most GameFi practices ended in failure.

Decentralized Social and InfoFi

This chart tracks daily active users and posting/interaction/link activity on Farcaster. After peaking in March 2026, daily active users and on-chain interaction scales have continued to decline, gradually cooling the market temperature for decentralized social platforms.

Decentralized Social represents the most direct implementation of the “users own the internet” ethos. Promising users control their social graphs, require no permission for access, and offer censorship resistance, giving rise to projects like Farcaster, Lens, and DeSo. However, aside from temporary users drawn by token incentives, these projects struggle to retain genuine participants, resulting in a sharp drop in overall activity.

InfoFi (Information Finance), pioneered by Kaito, binds online attention, content creation, and economic rewards. Initially producing substantial high-quality content, it later suffered rampant traffic farming and revenue extraction, flooding feeds with spam. Following X’s closure of relevant APIs, Kaito’s Yaps, Cookie DAO’s Snaps, and Wallchain’s Quacks all ceased operations.

The vision envisioned by crypto idealists has not materialized in the short term. However, Bitcoin has already been recognized by certain market segments as digital gold; traditional finance is also actively adopting blockchain as the next-generation foundational 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 various idealist experiments had essentially concluded by 2024–2025. The market shifted from grand narratives to sectors like stablecoins and asset tokenization, where viable business models were easier to establish, causing the ideals of the previous cycle to gradually fade from public view.

But reality continued to deteriorate: innovation had stalled at that point, capital and traffic began to flee, though legacy projects could barely limp along using remaining funds and operational momentum. Recently, however, these older projects have faced their true endgame, initiating widespread pivots or shutting down directly.

As presented in the table, 2026 witnessed waves of shutdowns and pivots across nearly every sector: centralized exchanges, data tools, public chains, layer twos, infrastructure, DeFi, gaming, and NFTs. The idealist experiments in the crypto world have now truly come to an end. The digital utopia imagined by idealists simply did not arrive.

A Barbell-Shaped Bipolar Market Forms, Tracks Converge in Direction

This scatter plot illustrates YoY changes in key metrics, showing the market polarizing at both ends: speculative categories and RWA tracks linked to traditional finance saw massive data surges, while traditional crypto tracks like native on-chain DeFi, NFTs, and restaking experienced severe contraction, leaving middle-ground sectors to falter.

After countless on-chain experiments perished, the crypto industry evolved into a polarized barbell structure. One end caters to users’ speculative demands; the other absorbs steady business needs tied to the real economy.

Native on-chain businesses occupying the middle ground, with ambiguous risk-return profiles, showed dismal operating metrics. This stems from three core reasons:

• Lack of Product-Market Fit: As detailed above, the vast majority of on-chain products failed to achieve PMF. Some cases that appeared viable, upon retrospective analysis, were merely false prosperity spurred by early airdrop activities. Truly valuable products that consistently deliver utility to users remain extremely rare.
• Deteriorating Risk-Reward Ratios: With weakening crypto market conditions, users gradually distinguished viable models from pseudo-demands. Expected returns for ordinary DeFi mining plummeted. Previously, steady stablecoin mining yielded 15–20% APY; nowadays, achieving even 5–10% APY is highly difficult. The appeal of mid-sector tracks has completely vanished. Users have split into two groups: those shifting to RWAs for 3–7% low-risk yields, and those flocking to meme coins, perpetual contracts, and prediction markets, taking high risks for excess returns.
• Rising Hacking Risks: Iterative upgrades in Large Language Model (LLM) AI capabilities have made on-chain hacking incidents increasingly frequent. Already shrunken expected yields combined with the threat of principal theft further undermine the appeal of standard on-chain products.

Conversely, data for the two polarized tracks rose against the trend, as if a bear market never existed. Certain businesses are tightly bound to crypto market cycles; others have established independent business models immune to token price fluctuations. Thus, the entire industry has formed a barbell-style development pattern.

The Speculative Demand Side

Speculation is not unique to the crypto industry; while speculative targets constantly evolve, human nature remains unchanged. From tulip mania, land speculation, stocks, to cryptocurrencies, speculative demand has objectively existed throughout history. The characteristics of smart contracts, on-chain transparency, and instant settlement make blockchain an excellent vehicle for speculative behavior. Following diminished interest in standard DeFi, a massive influx of traditional DeFi users poured into speculative tracks, with representative categories being meme coins, prediction markets, and decentralized perpetual DEXs.

Meme Coins

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

This bar chart displays revenue trends for the shturl.c platform. Despite broader market volatility, revenue for this meme coin issuance platform has maintained high levels long-term, surging past $2 million in August–September 2026, reflecting the sustained heat of the meme sector.

Spot DEX trading volume nearly crashed 80% over the past year, yet shturl.c demonstrated exceptional revenue resilience, doubling its income from lows within the last month. The platform implements a “graduation” mechanism: once a token’s market cap hits a threshold, it migrates from a bonding curve to an AMM pool. The proportion of successfully graduated tokens rose from an average of under 1% to over 3%.

Displaying the daily spot trading volume share in July, Meme coins (bright yellow) held an extremely high initial share. Although gradually decreasing, they remain the chain’s primary trading category, surpassing the share of ETH-stablecoin and tokenized asset trades.

The newly launched Robinhood Chain was initially positioned as an RWA tokenization public chain. However, the vast majority of its trading volume originates from meme coins. Blockworks data shows that over half of post-launch spot volume was contributed by memes. Ironically, meme coins have become the growth engine for this RWA-focused chain.

This graph charts the net revenue trend of the Fomo platform. Launching in June 2025, revenue skyrocketed explosively in the second half of 2026, corroborating the rapid expansion of this meme trading platform.

Another notable platform is Fomo, built by ex-dYdX employees. Featuring a low interaction barrier, it enables rapid meme coin discovery, integrates a social feed, and supports Apple Pay, pushing daily average revenue past $400,000. shturl.c, Robinhood Chain, and Fomo collectively prove one thing: regardless of bull or bear market transitions, market demand for meme coins remains intensely robust.

Historically, entering the meme coin space required high barriers: hunting opportunities across X and Telegram communities, querying data via Dexscreener, connecting wallets to DEXs for execution—a domain mostly reserved for insiders. Today, TikTok spreads meme culture everywhere, and apps supporting Apple Pay allow direct token purchases. Mainstream users outside the circle can enter conveniently. Coupled with declining traditional DeFi yields and lowered entry barriers, meme coins have evolved into a relatively independent track with minimal correlation to broader market trends.

Prediction Markets

Showcasing monthly trading volume for prediction markets, platforms like Kalshi and Polymarket drove the scale from virtually negligible in 2024 to skyrocketing into the hundreds of billions by mid-2026, signaling explosive sector growth.

Over the past year, prediction markets ranked among the fastest-growing tracks: transaction volume exploded 3032% YoY, climbing 320% within the year, with growth momentum unyielding. Top platform valuations continue soaring: Kalshi, valued at $750k in 2019, raised through multiple rounds to hit a $22 billion valuation in May 2026, targeting $40 billion for its next round. Polymarket’s valuation climbed from $18.58 million in 2020 to $15 billion, aiming for over $20 billion in new funding.

Dual donut charts compare the trading structures of Polymarket and Kalshi. Sports rank as the #1 category on both; Polymarket features higher proportions for crypto and political themes, while Kalshi’s sports segment accounts for 74.48%.

Industry discussions on prediction markets often cite information discovery and risk hedging as key benefits, but currently, genuine business demand for these functions remains highly limited. Kalshi’s volume stems mainly from sports events and crypto trends; Polymarket covers broader categories, but trading volume is still dominated by sports, crypto assets, and political events.

Comparing open interest accumulation across weather and sports contracts of varying durations reveals distinct patterns: weather contracts see heavy early positioning, whereas sports contracts typically accumulate positions rapidly only near expiration.

Contrasting weather and sports contracts highlights their differences: weather contract users open positions early, leaning toward hedging and risk avoidance; sports contracts concentrate trading activity near events, fundamentally driving speculative behavior.

Prediction markets achieved rapid expansion during the bear market largely due to an influx of massive numbers of external, non-crypto-native users. Statistics show 56.1% of Polymarket wallet addresses have never interacted with a DEX. While this doesn’t mean every user is completely unfamiliar with crypto, many treat prediction markets as their gateway product to blockchain. Sports and political hotspot events help platforms break free from the crypto cycle to acquire external incremental users.

Decentralized Perpetual Exchanges (Perp DEXs)

Comparing volumes across both DEX types, perpetual DEXs (blue) have consistently traded higher than spot DEXs (red) since 2025, demonstrating significantly stronger derivative trading demand versus spot.

Although perpetual DEXs lack the explosive growth seen in memes and prediction markets, they exhibit remarkably strong downside resilience in bearish environments compared to other on-chain metrics. The decline in perp DEX volume is far less severe than spot DEXs, proving that derivative speculative demand outpaces spot trading demand. Driven primarily by two factors:

• Continuous emergence of new perpetual protocols: Following Hyperliquid’s success, new projects like Lighter, Aster, Variational, Grvt, and edgeX launched sequentially. Originally non-derivative focused chains/projects like Jito, Jupiter, and Ondo Finance also added perpetual products. The market developed a “use new protocols to farm airdrops” meta, continuously injecting new users into the sector.
• Rise of RWA Perp Contracts: Past contract underlying assets were limited to BTC and ETH. Influenced by geopolitical tensions and AI sector rallies, major platforms now list commodities and US equities. For example, investors outside Korea find it difficult to trade Samsung Electronics stock directly, but can trade its corresponding perpetual contract on Hyperliquid, a pair that once commanded extremely high volume.

The concept of perpetual swaps originated with BitMEX. While BitMEX’s own business declined toward shutdown, the perpetual swap track continues to expand. Coinbase, Robinhood, Kalshi, alongside traditional regulated exchanges like Singapore Exchange and Chicago Mercantile Exchange (CME), have begun deploying similar trading products.

The End Tied to the Real Economy

Market growth does not stem entirely from speculation. The opposite end of the barbell consists of mundane-but-steady tracks deeply anchored to the real world. Stablecoins, RWA tokenization, and Asset Vaults maintain growth trajectories even as token markets and overall on-chain TVL trend downward.

Venture capital directed at native on-chain projects shows clear contraction in both project count and funding size; conversely, blockchain projects integrated with the real economy command progressively larger single-round financings. Examples include Rain’s $250M Series C, Airwallex’s $320M Series H, Gauntlet’s $125M raise, and OpenFX’s $94M financing. This sufficiently proves these tracks have achieved independent product-market fit, unconstrained by crypto bull-bear cycles.

Stablecoins

The white line indicates stablecoin total market cap remains relatively flat, while stacked bars representing stablecoin payment transaction volume surge continuously upward, reflecting a shift in stablecoin application focus toward actual payments.

Contrary to common perception, stablecoin total supply grew by only ~11% over the past year, hovering sideways since October 2025. Meanwhile, tokenized Treasuries and private credit expanded rapidly, causing stablecoin supply growth rates to plateau.

This does not signal sector stagnation. In a crashing broader market, maintaining existing volume is itself an achievement. More critically, payment scenarios have exploded. Cryptocurrency payment cards like RedotPay, KAST, EtherFi, and Plasma One saw monthly payment scale nearly triple from $438.1 million in July 2025 to $1.32 billion in July 2026.

Initially conceived merely as intermediary mediums for crypto trading, stablecoins are increasingly deployed in real-world payment scenarios. In the future, they will also serve as the core currency for on-chain settlements within the RWA tokenization framework.

RWA (Real World Assets)

The total scale of RWA tokenization continues its upward trajectory. Traditional assets like US Treasuries and commodities form the primary growth drivers, expanding independently of the broader cryptocurrency market cycle.

2025–2026 mark the explosion year for RWA. The market anticipates blockchain modernizing outdated traditional financial infrastructure, bringing diverse real-world assets on-chain. Early targets focused on US Treasuries and money market funds, featuring simple product forms and straightforward minting logic; subsequent expansions covered private credit, recently reaching equities and equity-like assets.

The value logic of RWA underlying assets operates independently of crypto market cycles. Leveraging advantages in efficiency enhancement and lower participation barriers, it can grow detached from crypto-specific booms and busts. Four Pillars’ past reports have deeply analyzed the RWA track, so we will refrain from redundant elaboration here.

Asset Vaults

The line chart charts TVL trends for curated vaults. After undergoing a retracement, they rebound again, nearing previously set historical peaks, indicating institutional custody-style vault capital heat returning to high levels.

Unlike RWAs that directly interface with real-world assets, Vaults do not, yet they are highly regarded by the industry as next-generation on-chain asset management modules. Vaults lend funds to lending markets accepting RWAs as collateral, thereby establishing indirect links to the real economy.

As of August 28, Bitcoin price had retraced 35% from its peak; meanwhile, curated vault TVL dipped only 4% below historical highs, proving the vault ecosystem navigated a divergent, independent trend.

Early RWA initiatives focused on “asset issuance on-chain”; now the industry has entered the asset application phase. The rise of RWA-collateralized lending will further drive market demand for vaults.

Why Crypto Enterprises Are No Longer in High Demand

This table outlines business layouts of mainstream crypto platforms, where △ denotes ongoing deployment, ○ indicates mature products, and – signifies untouched areas, reflecting the industry’s widespread pivot toward emerging tracks like perp DEXs, prediction markets, RWA, and stablecoins.

Consequently, a fascinating commercial phenomenon emerges in crypto: blockchain enterprises with entirely different backgrounds and original positioning are now developing nearly identical products, engaged in fierce mutual competition. Platforms are rolling out perpetual contracts and prediction markets, supporting meme coin trading, and laying groundwork for stablecoins, RWA trading, and asset vaults.

The underlying logic is straightforward: as analyzed above, only a handful of tracks can simultaneously withstand broad market volatility and generate tangible business revenue. Even with recent market recoveries, the overarching industry direction remains unchanged, with a flood of crypto enterprises pouring into these counter-cyclical tracks.

This does not signify absolute failure for native on-chain projects. As noted earlier, while numerous experiments perished, a few survivors have successfully achieved PMF. EigenLayer retains substantial ETH in restaking; despite widespread pessimism regarding the GameFi track, MapleStory Universe continues to deliver impressive metrics.

The on-chain ecosystem has crystallized into a barbell structure. Viewed negatively: the industry is left with very few tracks possessing growth potential. Viewed positively: it marks the maturation of certain crypto businesses finding their proprietary business models. We anticipate more tracks will eventually reach this stage in the future.