This is a segment of the 0xresearch newsletter. Subscribe to read full editions.
We call this industry the “blockchain” industry. But people are tired of too many chains.
If you launch a new chain in 2025, expect a lot of skepticism on Twitter. It is what all L1 blockchain had to be confronted in the past week.
- Camp Network, an intellectual property -oriented L1, raised $ 30 million with a rating of $ 400 million.
- Until, an SVM -based L1, $ 14.4 million has collected at a rating of $ 140 million.
- Mids, a ZK -Rollup, collected $ 25 million (unknown appreciation).
“Another chain, why?”
The simplest explanation is ‘greed’. It is the legendary L1 premium!
Lately watch the price performance of Sui-What explains a token of $ 6.8 billion-market cap for almost half a month?
We can all agree that it is not based on Fundamentals. The reimbursements generated on Sui are on Shame Pal compared to the highlights in December.
Maybe I am Kersie and Sui is an anomaly. Maybe the L1 premium dies, but it is not completely dead yet.
Until then, there are still the incentives to launch new L1s.
The second (and charity institution) explanation is simple that founders launching chains have competitive visions about how a chain should be optimized.
How should the implementation environment be designed? How is MEV recorded? Which low availability layer to use? Should there be a standardized oracle or guest smoking?
These things are not trivial. They determine where application developers are going to build and make or break the success in the long term of a chain.
Expecting protocol builders to agree is as if you are bringing a hundred people to agree on the menu of a buffet.
It is also not all technical – there are considerations of social low. Take, for example, Rogue, @Fede_intern’s upcoming ZK Rollup who wants zero VCs, Insider allocation and a completely honest launch as Bitcoin wants.
Builders have different opinions. They launch their own chains. It’s that simple. That is economic freedom. We have to celebrate.
A solution?
However, there may be some comfort in the fact that L1 values are already compressing.
One of the highest profile L1 last year was Monad. The ratings were not announced, but according to PitchBook it was reportedly on unicorn status, so that puts Monad in the reach of a billion.
Or consider the Initia L1, which was appreciated at $ 350 million last year.
These increases are nothing like what was seen in the last cycle.
Compare this with when Avalanche reportedly collected a rating of $ 5.25 billion in 2022, or electricity, which has risen with a rating of $ 7.6 billion.
These figures are dramatic for L1S.
Have responded public markets to the aversion to more chains and correct the private markets overtime. The free market works.
Check the data when we zoom out. The graph below shows a downward process for total financing that has been collected for block chains.
For those who are frustrated with “too many chains” who would not see any at all, it is probably not a satisfactory answer.
An underlying desire to see more applications is also bound to this frustration.
Fun fact: Ironically, consumer apps received the lion’s share of venture financing versus infrastructure in 2013-2017 (the fat protocol thesis of Joel Monegro was written in 2016).
Source: Outlier Ventures
That of course turned around today. Is there a reason why the financing of applications has fallen out of grace with VCS?
Take it from 1kx, which claims to be one of the most active investors in consumers apps.
1KX partner Peter Pan told me: “Applications live and die through their traction and following it is an immediate feedback loop. While with infrastructure you can continue to find financing in a pre-launch state based on existing market compositions, and push further and further.”
