According to Ben Fisch, the CEO of Espresso Systems, the current environment in the crypto industry has led to an overabundance of general-purpose layer twos that lack distinct value. “There are just too many similar products out there; it doesn’t make sense,” he stated in an interview with CoinDesk. “We are experiencing a consolidation phase specifically for general-purpose layer twos, rather than for layer twos in general.”
Industry experts believe this trend signifies a larger transformation within the cryptocurrency world, affecting more than just Ethereum scaling solutions.
“Consolidation is unfolding throughout the crypto landscape, encompassing everything from DeFi protocols to decentralized exchanges and various infrastructure providers,” remarked Marek Olszewski, co-founder of Celo. “This indicates that the industry is evolving. The platforms that endure during this phase are the ones that users truly rely on and value,” he explained.
Nick Puckrin, founder of Coin Bureau, highlighted in a post on X that for every known crypto project that ceases operations, there are approximately ten others quietly exiting the scene. “This could be seen as a phase of creative destruction that sets the stage for the next cycle,” he noted.
Orkun Mahir Kılıç, co-founder and CEO of Chainway Labs, which is developing the Bitcoin layer-2 solution Citrea, commented that the recent wave of shutdowns mirrors a maturing market where attracting investment has become more challenging and investors are becoming more discerning.
“Various companies have different motivations and issues leading to their closures. The emerging trend does not necessarily indicate a fundamental flaw within the layer two ecosystem. As the market and technology evolve, funding is now more deliberate and cautious. Only those projects with robust business models and a clearly defined problem will endure,” Mahir Kılıç stated to CoinDesk.