Why Is the Crypto Industry Collectively Heading Toward Homogenization?

Written by: 100y_eth

Translated by: Saoirse, Foresight Information

The Majority of Crypto Idealist Experiments Have Come to an Finish

“Decentralization”, Learn-Write-Personal, Web3, Group Possession, Immutability, Community State, Code is Legislation, Trustless Verification, Creator Financial system, Pluralism, Future Governance…

These ideas have lengthy transcended mere technical jargon. They attracted numerous idealistic practitioners into the blockchain trade, who believed they may construct a extra open, free, and honest digital world.

Everybody has totally different visions for the future, however there’s a consensus inside the trade: blockchain has the energy to reshape current order. Numerous practitioners have thrown themselves into this discipline, turning beliefs into apply, spawning quite a few experiments, protocols, and companies, and repeatedly increasing 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, Transfer-to-Earn, Metaverse, Totally On-Chain Video games, Gaming Guilds, Decentralized Social, Decentralized Identification (DID), On-chain Fame, Soulbound Token (SBT), Algorithmic Stablecoin, Restaking, InfoFi, Ethereum Killer, Appchains, Modular Blockchain, zkEVM, Rollup-as-a-Service, Intent-centric Buying and selling, Chain Abstraction, DePIN, Decentralized Power, Regen Finance (ReFi), Decentralized Science (DeSci), Knowledge Marketplaces, Decentralized AI Computing Energy…

Regrettably, nevertheless, the overwhelming majority of those experiments have failed. The variety of failed tasks is gigantic; beneath are some consultant examples.

Bitcoin Ecosystem

This chart illustrates Bitcoin community price tendencies from 2023 to 2026. Throughout the inscription growth, charges surged repeatedly. After 2025, charges receded, and community congestion brought on by inscriptions has largely subsided.

Inscriptions, Ordinal NFTs, and Runes retailer arbitrary information utilizing Bitcoin script opcodes like OP_RETURN. At the time, the market hyped that Bitcoin may additionally problem tokens and NFTs, with associated enthusiasm remaining exceptionally excessive. In 2023, inscriptions drove up Bitcoin community charges, main some to argue that the charges generated may offset the shortfall from Bitcoin’s block reward halving. Nevertheless, to this point, their impression on community charges has turn into virtually negligible. The once-top-tier Ordinal NFT challenge Ordinal Maxi Biz noticed its flooring worth peak at 1.5 BTC, with current transactions closing at solely round 0.018 BTC. Magic Eden, as soon as the largest Bitcoin NFT market, ceased all Bitcoin NFT buying and selling operations in March of this yr.

Bitcoin Layer 2 Networks: Applied sciences corresponding to Taproot and BitVM led the market to imagine that programmable, scalable Layer 2 networks could possibly be constructed atop Bitcoin, the most safe blockchain. Consequently, many tasks secured funding from top-tier enterprise capital corporations. But at present, the general ecosystem efficiency stays dismal. BOB, the highest-locked Bitcoin L2, noticed its Complete Worth Locked (TVL) plummet by 96.6% from its peak, leaving solely $9.24 million. Corn, BEVM, and Lorenzo have accomplished thorough pivots, whereas Botanix shut down solely.

L1 and L2 Public Blockchains

Evaluating the TVL share between Ethereum and different public chains from 2021 to 2026, regardless of the steady rise of competing chains, Ethereum nonetheless maintains the highest share of whole DeFi TVL, indicating that the trade’s dominant panorama has not been disrupted.

Numerous rising L1s and L2s publicly claimed they may comprehensively surpass Ethereum in scalability, incentive mechanisms, sensible contract safety, and market operation methods. Nevertheless, many tasks by no means discovered product-market match (PMF), devolving into “ghost chains” devoid of actual customers. Except for BNB Chain, Tron, Solana, and Base—which accrued real person bases and established closed-loop enterprise fashions—the overwhelming majority of different public chains didn’t seize vital market share from Ethereum.

Infrastructure Monitor

Modular Blockchains had been the hottest infrastructure observe in 2022–2023. Ranging from Knowledge Availability (DA) layers, the market noticed the emergence of shared sequencers, Rollup-as-a-Service, and varied customized Rollup options. The underlying design philosophy of modularity was not flawed; Arbitrum, Base, and Robinhood Chain proceed to function robustly to at the present time. But, the overwhelming majority of highly-publicized modular startups from that period both pivoted or went bankrupt outright. That wave of modular hype might be thought of an trade experiment that has already failed.

This chart exhibits the TVL development in the Restaking sector from 2024 to 2026. The sector’s locked scale peaked close to $30 billion earlier than experiencing a pointy drawdown, declining extra severely than different DeFi segments.

Restaking refers to the repeated utilization of tokens already staked on PoS public chains to supply financial safety assurances for different protocols. EigenLayer pioneered this observe, adopted by Symbiotic, Karak, and ecosystem performs like Babylon and Solayer throughout varied chains. The sector’s TVL reached a peak of $30 billion however has since retreated to roughly $8 billion. Whereas the lock-in quantity stays substantial, the related narrative has considerably cooled: the market holds plentiful reusable safety sources, but actual enterprise demand requiring such assurance is extremely scarce. EigenLayer has softly pivoted to give attention to AI brokers by way of EigenCloud; Symbiotic shifted towards high-performance L1s, and Karak remodeled right into a collateral buying and selling platform.

Algorithmic Stablecoins

This graph illustrates the market cap development of Terra UST from 2021 to 2026. UST’s market cap as soon as surged close to $20 billion earlier than utterly collapsing to zero, an occasion that just about turned algorithmic stablecoins right into a taboo matter inside the crypto trade.

The aim of algorithmic stablecoins was to decouple from totally collateralized belongings and create decentralized on-chain currencies with larger capital effectivity. UST (now USTC) on the Terra ecosystem was the most well-known case, with a circulating provide peaking at over $18 billion and rating amongst the high ten crypto belongings. Nevertheless, exterior assaults compounded by elementary flaws in its mechanism design precipitated the token’s worth to crash to zero, dragging down the complete Terra ecosystem. Different algorithmic stablecoin tasks like FEI, IRON, and ESD additionally met full failure. FRAX initially utilized an algorithmic mechanism however later transitioned to a fiat-collateralized mannequin.

NFT, GameFi, and Metaverse Ecosystem

This bar chart shows OpenSea’s month-to-month buying and selling quantity tendencies. Throughout the 2022 NFT growth, the platform’s month-to-month quantity as soon as surged close to $5 billion. After the hype pale, buying and selling quantity remained at low ranges for an prolonged interval, symbolizing how the NFT bull run was akin to a fleeting dream.

NFTs as soon as broke out into mainstream visibility. Rising on Ethereum in 2021, they subsequently unfold to Solana and Klaytn ecosystems. High assortment costs skyrocketed earlier than struggling a collective crash. CryptoPunks fell from 125 ETH to 32 ETH; BAYC dropped from 150 ETH to eight ETH; Pudgy Penguins declined from 35 ETH to three.8 ETH; Azuki tumbled from 30 ETH to 0.8 ETH. Main NFT platform OpenSea’s month-to-month buying and selling quantity shrank from a peak of $5 billion to roughly $30 million.

Play-to-Earn (P2E), centered on the core idea that gamers personal the in-game financial system and earn crypto belongings whereas taking part in to share in ecosystem worth. To keep up sustainability, video games should generate real financial worth or incentivize voluntary participant spending—each of which had been by no means totally realized, main the overwhelming majority of tasks to chapter. Axie Infinity, which ignited the P2E craze, peaked at 6.5 million month-to-month lively wallets and $103.8 million in charges; at present, MAUs fall wanting 100,000 with month-to-month charges dropping beneath $50,000.

Using the P2E wave, land-based metaverse tasks like The Sandbox and Decentraland briefly gained large reputation. Sandbox land NFT costs crashed 99%, plummeting from a peak of ~$15,000 to $50. Transfer-to-Earn tasks like Stepn and Sweat misplaced their traction shortly. 3A-grade chain video games corresponding to Star Atlas and Otherside by no means formally launched, and the idea of totally on-chain video games constantly failed to draw mass mainstream adoption. As soon as considered as the way forward for gaming, most GameFi practices led to failure.

Decentralized Social and InfoFi

This chart tracks each day lively customers and posting/interplay/hyperlink exercise on Farcaster. After peaking in March 2026, each day lively customers and on-chain interplay scales have continued to say no, progressively cooling the market temperature for decentralized social platforms.

Decentralized Social represents the most direct implementation of the “customers personal the web” ethos. Promising customers management their social graphs, require no permission for entry, and supply censorship resistance, giving rise to tasks like Farcaster, Lens, and DeSo. Nevertheless, apart from momentary customers drawn by token incentives, these tasks wrestle to retain real members, leading to a pointy drop in general exercise.

InfoFi (Info Finance), pioneered by Kaito, binds on-line consideration, content material creation, and financial rewards. Initially producing substantial high-quality content material, it later suffered rampant visitors farming and income extraction, flooding feeds with spam. Following X’s closure of related APIs, Kaito’s Yaps, Cookie DAO’s Snaps, and Wallchain’s Quacks all ceased operations.

The imaginative and prescient envisioned by crypto idealists has not materialized in the quick time period. Nevertheless, Bitcoin has already been acknowledged by sure market segments as digital gold; conventional finance can be actively adopting blockchain as the next-generation foundational monetary infrastructure. Blockchain has lastly discovered its personal product-market match.

The Finish of the On-Chain Experiment Period: Crypto Tasks Shutting Down or Pivoting in 2026

The trade beforehand believed that varied idealist experiments had primarily concluded by 2024–2025. The market shifted from grand narratives to sectors like stablecoins and asset tokenization, the place viable enterprise fashions had been simpler to ascertain, inflicting the beliefs of the earlier cycle to progressively fade from public view.

However actuality continued to deteriorate: innovation had stalled at that time, capital and visitors started to flee, although legacy tasks may barely limp alongside utilizing remaining funds and operational momentum. Lately, nevertheless, these older tasks have confronted their true endgame, initiating widespread pivots or shutting down straight.

As offered in the desk, 2026 witnessed waves of shutdowns and pivots throughout practically each sector: centralized exchanges, information instruments, public chains, layer twos, infrastructure, DeFi, gaming, and NFTs. The idealist experiments in the crypto world have now really come to an finish. The digital utopia imagined by idealists merely didn’t arrive.

A Barbell-Formed Bipolar Market Kinds, Tracks Converge in Route

This scatter plot illustrates YoY adjustments in key metrics, exhibiting the market polarizing at each ends: speculative classes and RWA tracks linked to conventional finance noticed large information surges, whereas conventional crypto tracks like native on-chain DeFi, NFTs, and restaking skilled extreme contraction, leaving middle-ground sectors to falter.

After numerous on-chain experiments perished, the crypto trade advanced right into a polarized barbell construction. One finish caters to customers’ speculative calls for; the different absorbs regular enterprise wants tied to the actual financial system.

Native on-chain companies occupying the center floor, with ambiguous risk-return profiles, confirmed dismal working metrics. This stems from three core causes:

• Lack of Product-Market Match: As detailed above, the overwhelming majority of on-chain merchandise failed to realize PMF. Some instances that appeared viable, upon retrospective evaluation, had been merely false prosperity spurred by early airdrop actions. Actually useful merchandise that constantly ship utility to customers stay extraordinarily uncommon.
• Deteriorating Threat-Reward Ratios: With weakening crypto market situations, customers progressively distinguished viable fashions from pseudo-demands. Anticipated returns for unusual DeFi mining plummeted. Beforehand, regular stablecoin mining yielded 15–20% APY; these days, reaching even 5–10% APY is extremely troublesome. The attraction of mid-sector tracks has utterly vanished. Customers have break up into two teams: these shifting to RWAs for 3–7% low-risk yields, and people flocking to meme cash, perpetual contracts, and prediction markets, taking excessive dangers for extra returns.
• Rising Hacking Dangers: Iterative upgrades in Massive Language Mannequin (LLM) AI capabilities have made on-chain hacking incidents more and more frequent. Already shrunken anticipated yields mixed with the risk of principal theft additional undermine the attraction of ordinary on-chain merchandise.

Conversely, information for the two polarized tracks rose in opposition to the development, as if a bear market by no means existed. Sure companies are tightly certain to crypto market cycles; others have established impartial enterprise fashions resistant to token worth fluctuations. Thus, the complete trade has fashioned a barbell-style improvement sample.

The Speculative Demand Aspect

Hypothesis will not be distinctive to the crypto trade; whereas speculative targets consistently evolve, human nature stays unchanged. From tulip mania, land hypothesis, shares, to cryptocurrencies, speculative demand has objectively existed all through historical past. The traits of sensible contracts, on-chain transparency, and instantaneous settlement make blockchain a superb car for speculative conduct. Following diminished curiosity in customary DeFi, an enormous inflow of conventional DeFi customers poured into speculative tracks, with consultant classes being meme cash, prediction markets, and decentralized perpetual DEXs.

Meme Cash

Demand for meme cash has continued 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 really reshaped the trade panorama was the launch of shturl.c in 2024, enabling anybody to deploy a meme coin with a single click on.

This bar chart shows income tendencies for the shturl.c platform. Regardless of broader market volatility, income for this meme coin issuance platform has maintained excessive ranges long-term, surging previous $2 million in August–September 2026, reflecting the sustained warmth of the meme sector.

Spot DEX buying and selling quantity practically crashed 80% over the previous yr, but shturl.c demonstrated distinctive income resilience, doubling its revenue from lows inside the final month. The platform implements a “commencement” mechanism: as soon as a token’s market cap hits a threshold, it migrates from a bonding curve to an AMM pool. The proportion of efficiently graduated tokens rose from a median of underneath 1% to over 3%.

Displaying the each day spot buying and selling quantity share in July, Meme cash (brilliant yellow) held a particularly excessive preliminary share. Though progressively lowering, they continue to be the chain’s main buying and selling class, surpassing the share of ETH-stablecoin and tokenized asset trades.

The newly launched Robinhood Chain was initially positioned as an RWA tokenization public chain. Nevertheless, the overwhelming majority of its buying and selling quantity originates from meme cash. Blockworks information exhibits that over half of post-launch spot quantity was contributed by memes. Paradoxically, meme cash have turn into the progress engine for this RWA-focused chain.

This graph charts the internet income development of the Fomo platform. Launching in June 2025, income skyrocketed explosively in the second half of 2026, corroborating the fast growth of this meme buying and selling platform.

One other notable platform is Fomo, constructed by ex-dYdX workers. That includes a low interplay barrier, it allows fast meme coin discovery, integrates a social feed, and helps Apple Pay, pushing each day common income previous $400,000. shturl.c, Robinhood Chain, and Fomo collectively show one factor: no matter bull or bear market transitions, market demand for meme cash stays intensely sturdy.

Traditionally, getting into the meme coin house required excessive limitations: searching alternatives throughout X and Telegram communities, querying information by way of Dexscreener, connecting wallets to DEXs for execution—a site largely reserved for insiders. At the moment, TikTok spreads meme tradition all over the place, and apps supporting Apple Pay enable direct token purchases. Mainstream customers exterior the circle can enter conveniently. Coupled with declining conventional DeFi yields and lowered entry limitations, meme cash have advanced into a comparatively impartial observe with minimal correlation to broader market tendencies.

Prediction Markets

Showcasing month-to-month buying and selling quantity for prediction markets, platforms like Kalshi and Polymarket drove the scale from nearly negligible in 2024 to skyrocketing into the lots of of billions by mid-2026, signaling explosive sector progress.

Over the previous yr, prediction markets ranked amongst the fastest-growing tracks: transaction quantity exploded 3032% YoY, climbing 320% inside the yr, with progress momentum unyielding. High platform valuations proceed hovering: Kalshi, valued at $750k in 2019, raised by way of a number of rounds to hit a $22 billion valuation in Could 2026, concentrating on $40 billion for its subsequent spherical. Polymarket’s valuation climbed from $18.58 million in 2020 to $15 billion, aiming for over $20 billion in new funding.

Twin donut charts evaluate the buying and selling buildings of Polymarket and Kalshi. Sports activities rank as the #1 class on each; Polymarket options larger proportions for crypto and political themes, whereas Kalshi’s sports activities phase accounts for 74.48%.

Industry discussions on prediction markets usually cite info discovery and threat hedging as key advantages, however presently, real enterprise demand for these capabilities stays extremely restricted. Kalshi’s quantity stems primarily from sports activities occasions and crypto tendencies; Polymarket covers broader classes, however buying and selling quantity continues to be dominated by sports activities, crypto belongings, and political occasions.

Evaluating open curiosity accumulation throughout climate and sports activities contracts of various durations reveals distinct patterns: climate contracts see heavy early positioning, whereas sports activities contracts sometimes accumulate positions quickly solely close to expiration.

Contrasting climate and sports activities contracts highlights their variations: climate contract customers open positions early, leaning towards hedging and threat avoidance; sports activities contracts focus buying and selling exercise close to occasions, essentially driving speculative conduct.

Prediction markets achieved fast growth throughout the bear market largely on account of an inflow of large numbers of exterior, non-crypto-native customers. Statistics present 56.1% of Polymarket pockets addresses have by no means interacted with a DEX. Whereas this doesn’t suggest each person is totally unfamiliar with crypto, many deal with prediction markets as their gateway product to blockchain. Sports activities and political hotspot occasions assist platforms break away from the crypto cycle to accumulate exterior incremental customers.

Decentralized Perpetual Exchanges (Perp DEXs)

Evaluating volumes throughout each DEX sorts, perpetual DEXs (blue) have constantly traded larger than spot DEXs (crimson) since 2025, demonstrating considerably stronger spinoff buying and selling demand versus spot.

Though perpetual DEXs lack the explosive progress seen in memes and prediction markets, they exhibit remarkably robust draw back resilience in bearish environments in comparison with different on-chain metrics. The decline in perp DEX quantity is much much less extreme than spot DEXs, proving that spinoff speculative demand outpaces spot buying and selling demand. Pushed primarily by two components:

• Steady emergence of latest perpetual protocols: Following Hyperliquid’s success, new tasks like Lighter, Aster, Variational, Grvt, and edgeX launched sequentially. Initially non-derivative targeted chains/tasks like Jito, Jupiter, and Ondo Finance additionally added perpetual merchandise. The market developed a “use new protocols to farm airdrops” meta, repeatedly injecting new customers into the sector.
• Rise of RWA Perp Contracts: Previous contract underlying belongings had been restricted to BTC and ETH. Influenced by geopolitical tensions and AI sector rallies, main platforms now listing commodities and US equities. For instance, buyers exterior Korea discover it troublesome to commerce Samsung Electronics inventory straight, however can commerce its corresponding perpetual contract on Hyperliquid, a pair that after commanded extraordinarily excessive quantity.

The idea of perpetual swaps originated with BitMEX. Whereas BitMEX’s personal enterprise declined towards shutdown, the perpetual swap observe continues to increase. Coinbase, Robinhood, Kalshi, alongside conventional regulated exchanges like Singapore Change and Chicago Mercantile Change (CME), have begun deploying comparable buying and selling merchandise.

The Finish Tied to the Actual Financial system

Market progress doesn’t stem solely from hypothesis. The alternative finish of the barbell consists of mundane-but-steady tracks deeply anchored to the actual world. Stablecoins, RWA tokenization, and Asset Vaults keep progress trajectories at the same time as token markets and general on-chain TVL development downward.

Enterprise capital directed at native on-chain tasks exhibits clear contraction in each challenge rely and funding dimension; conversely, blockchain tasks built-in with the actual financial system command progressively bigger single-round financings. Examples embody Rain’s $250M Sequence C, Airwallex’s $320M Sequence H, Gauntlet’s $125M elevate, and OpenFX’s $94M financing. This sufficiently proves these tracks have achieved impartial product-market match, unconstrained by crypto bull-bear cycles.

Stablecoins

The white line signifies stablecoin whole market cap stays comparatively flat, whereas stacked bars representing stablecoin cost transaction quantity surge repeatedly upward, reflecting a shift in stablecoin utility focus towards precise funds.

Opposite to widespread notion, stablecoin whole provide grew by solely ~11% over the previous yr, hovering sideways since October 2025. In the meantime, tokenized Treasuries and personal credit score expanded quickly, inflicting stablecoin provide progress charges to plateau.

This doesn’t sign sector stagnation. In a crashing broader market, sustaining current quantity is itself an achievement. Extra critically, cost situations have exploded. Cryptocurrency cost playing cards like RedotPay, KAST, EtherFi, and Plasma One noticed month-to-month cost scale practically triple from $438.1 million in July 2025 to $1.32 billion in July 2026.

Initially conceived merely as middleman mediums for crypto buying and selling, stablecoins are more and more deployed in real-world cost situations. In the future, they can even function the core foreign money for on-chain settlements inside the RWA tokenization framework.

RWA (Actual World Property)

The entire scale of RWA tokenization continues its upward trajectory. Conventional belongings like US Treasuries and commodities kind the main progress drivers, increasing independently of the broader cryptocurrency market cycle.

2025–2026 mark the explosion yr for RWA. The market anticipates blockchain modernizing outdated conventional monetary infrastructure, bringing various real-world belongings on-chain. Early targets targeted on US Treasuries and cash market funds, that includes easy product kinds and simple minting logic; subsequent expansions coated non-public credit score, just lately reaching equities and equity-like belongings.

The worth logic of RWA underlying belongings operates independently of crypto market cycles. Leveraging benefits in effectivity enhancement and decrease participation limitations, it may well develop indifferent from crypto-specific booms and busts. 4 Pillars’ previous experiences have deeply analyzed the RWA observe, so we are going to chorus from redundant elaboration right here.

Asset Vaults

The road chart charts TVL tendencies for curated vaults. After present process a retracement, they rebound once more, nearing beforehand set historic peaks, indicating institutional custody-style vault capital warmth returning to excessive ranges.

In contrast to RWAs that straight interface with real-world belongings, Vaults don’t, but they’re extremely regarded by the trade as next-generation on-chain asset administration modules. Vaults lend funds to lending markets accepting RWAs as collateral, thereby establishing oblique hyperlinks to the actual financial system.

As of August 28, Bitcoin worth had retraced 35% from its peak; in the meantime, curated vault TVL dipped solely 4% beneath historic highs, proving the vault ecosystem navigated a divergent, impartial development.

Early RWA initiatives targeted on “asset issuance on-chain”; now the trade has entered the asset utility part. The rise of RWA-collateralized lending will additional drive market demand for vaults.

Why Crypto Enterprises Are No Longer in Excessive Demand

This desk outlines enterprise layouts of mainstream crypto platforms, the place △ denotes ongoing deployment, ○ signifies mature merchandise, and – signifies untouched areas, reflecting the trade’s widespread pivot towards rising tracks like perp DEXs, prediction markets, RWA, and stablecoins.

Consequently, an interesting business phenomenon emerges in crypto: blockchain enterprises with solely totally different backgrounds and unique positioning at the moment are growing practically an identical merchandise, engaged in fierce mutual competitors. Platforms are rolling out perpetual contracts and prediction markets, supporting meme coin buying and selling, and laying groundwork for stablecoins, RWA buying and selling, and asset vaults.

The underlying logic is simple: as analyzed above, solely a handful of tracks can concurrently face up to broad market volatility and generate tangible enterprise income. Even with current market recoveries, the overarching trade path stays unchanged, with a flood of crypto enterprises pouring into these counter-cyclical tracks.

This doesn’t signify absolute failure for native on-chain tasks. As famous earlier, whereas quite a few experiments perished, a couple of survivors have efficiently achieved PMF. EigenLayer retains substantial ETH in restaking; regardless of widespread pessimism concerning the GameFi observe, MapleStory Universe continues to ship spectacular metrics.

The on-chain ecosystem has crystallized right into a barbell construction. Considered negatively: the trade is left with only a few tracks possessing progress potential. Considered positively: it marks the maturation of sure crypto companies discovering their proprietary enterprise fashions. We anticipate extra tracks will ultimately attain this stage in the future.