It's the end of the era of the Great Salin

Author:Dara VC

Other Organiser

 

The Grant model for L1 is no longer valid. It's not the kind of failure that needs to be fine-tuned, but the total failure in terms of structural, conceptual and motivational consistency。

THE L1 TEAM THAT OPERATES THESE PROJECTS IS EITHER IN THE MIDST OF "THE AUTHORITIES' FASCINATION" OR TOO WORRIED ABOUT THE NEGATIVE EFFECTS OF STOPPING。

Where the hell is the money

NEAR HAD ANNOUNCED THE ESTABLISHMENT OF AN ECOLOGICAL FUND OF $800 MILLION, OF WHICH $250 MILLION WAS EARMARKED FOR ECOLOGICAL SUPPORT FOR THE NEXT FOUR YEARS. BEFORE THAT, NEAR HAD DISBURSED MORE THAN $45 MILLION TO MORE THAN 800 PROJECTS。

Avalanche has committed more than $250 million in funding for its ecosystem development。

Aptos operates landmark-based ecological support ranging from $5,000 to $50000, up to $1.55 million for the payment category. BNB Chain provided up to $200,000 per project。

Overall, of all the major L1s, hundreds of millions, possibly more than a billion, have been invested in this "financing machine" over the past four years. As of 2024, there were more than 50 active Web3-funded projects worldwide supporting projects covering public goods, DeFi, tools, AI and infrastructure。

You might think that with such a huge influx of money, we should see a lot of groundbreaking companies, unicorn agreements and truly long-term retention of mobile and user ecosystems。

BUT THAT IS NOT THE CASE. TVL (TOTAL LOCKED VALUE) IS RUNNING AWAY AND DEVELOPERS ARE CHASING THE NEXT INCENTIVE. THE BRIGHT DATA REPORTED TO THE BOARD IN THE PREVIOUS QUARTER SEEMED EMBARRASSING SIX MONTHS LATER. AND THE QUESTION THAT NOBODY WANTS TO ASK IN PUBLIC IS, WHERE IS THE MONEY

The original design of the eco-financing model

TO BE FAIR, ECO-FINANCING MODELS USED TO BE MEANINGFUL. IN 2020, 2021, WHEN L1 IS REALLY TRYING TO START THE ECOSYSTEM COLD FROM SCRATCH, FUNDING IS A REASONABLE KIND OF FIRE. YOU NEED DEVELOPERS BEFORE YOU HAVE USERS, YOU NEED PROTOCOLS BEFORE YOU HAVE LIQUIDITY. THE FUNDING CAN IGNITE THE FIRST FLYING WHEEL。

In the early stages of Web3 development, ecological financing played a crucial financial role. They support open source contributions, stimulate participation in new agreements and allow teams to build MVPs without immediate liquidity pressure. Funding is the ideal option for conceptualization and experimentation。

"Fire seed" is the key word here. No one designed funding as a permanent fuel. But this is precisely the state of many ecosystems — a long-term “leap” feeding that allows projects to survive on life-support systems without ever forcing them to truly breathe。

The proliferation of projects dependent on funding has exposed key limitations. Funding often encourages short-term thinking, and teams optimize for funding rotations rather than for sustainable operations. Projects may be trapped in a dead-end cycle of writing proposals and sponsoring, with less focus on creating a viable user base or income-generating products。

The hamster wheel trap that spins in situ

A team targeted a middle L1 — well-funded foundations, active funding committees and, crucially, networks with less competitive funding. They have developed products that match the current funding list: the DeFi tool, the DEX, the NFT market, some kind of "AI integration" (whatever it means in this cycle)。

THEY SUBMITTED A BEAUTIFUL PROPOSAL TO ACHIEVE KPI AS SET OUT IN THE MILESTONE STRUCTURE, TO RECEIVE THE FUNDS IN BATCHES AND TO PRODUCE DYNAMIC DATA THAT THE FOUNDATION TEAM COULD DISPLAY IN THE QUARTERLY REPORT。

A small group of mature teams has repeatedly won funding, opportunities and attention. Even in systems such as secondary financing, these same teams tend to dominate and exclude new entrants。

For a long time, a smarter team has discovered the dynamics of this cartel and is more than able to move directly into it. They have established relationships with funding committees, become "circle acquaintances" in the ecosystem of Discord and position themselves as reliable recipients of funding for the cycle。

Then, when the ecosystem touches the ceiling, when TVL does not grow, when real mobility remains at Solana and the Ethera (because that's where the real users are located), these teams act rationally. They began to assess the next active ecosystem, transplant their code, write new proposals and then take off。

The success of funded projects is measured by the amount of funds disbursed or the funds allocated, but this does not provide an overall picture. The TVL chart shows the truth, the developers maintain data, and the dead Discord channel tells the truth。

Nobody mentioned the hostage dilemma

The eco-financing model has created a strange dynamic that is rarely openly discussed: it creates a hostage relationship and both sides are hostages。

The Foundation has become hostage to its own indicators. They committed to deploying capital and had to report to the Board on the growth of ecosystems, and the simplest way to demonstrate growth was to provide more funding, more projects and better data。

The Etherak Foundation funded 105 projects before it realized the need to suspend applications. Quantities themselves become a problem, overburdening streamlined teams with the ability to assess real long-term impacts。

Even the most mature and credible Etherma ecosystems in this field will eventually have to stop and reflect... Are we creating value, or are we just creating activity

THE GIFTED TEAM IS ANOTHER HOSTAGE. ONCE YOU ENTER THE FUNDING CYCLE, YOUR ORGANIZATIONAL STRUCTURE WILL BE BUILT AROUND IT. YOUR ROAD MAP BECAME A FUNDING PROPOSAL, AND YOUR KPI BECAME ANYTHING THE COMMITTEE WANTED TO SEE. YOU NO LONGER MAKE PRODUCT DECISIONS ON THE BASIS OF USER NEEDS, BUT ON THE BASIS OF WHAT MONEY IS AVAILABLE。

Web3 founders and developers must recognize that success is measured not only by funding rotations or community engagements, but that the long-term impact comes from building infrastructure and applications that meet the time test. Financing can be fire, but it must never be fuel。

The tragedy is that truly talented teams are trapped. They could have created real value, but on the contrary, they were optimizing their applications for funding and were mixed up in various Telegram groups。

The real role of direct equity investments

LET US COMPARE IT WITH THE FACT THAT L1'S WINDFALL DEPARTMENTS ISSUE GENUINE CHEQUES — INVESTING IN THEIR TRULY GOOD COMPANIES IN THE FORM OF EQUITY PLUS COINS。

As the strategic investment arm of Solana Labs, Solana Ventures has a clear mission to accelerate the development of the Solana block chain itself as a lever for ecosystem growth. The company often develops partnerships with the game studio。

It is not only an investor, but also a partner in infrastructure and market access, helping teams build the original Solana game economy and integration。

This is distinct from funding. When you accept equity and tokens, you're in jail for something. It changes the way you interact with them. You're sitting on the same side of the table now。

YOU WANT THEM TO FIND PRODUCT MARKET CONVERGENCE (PMFS), YOU WANT THEM TO COMPLETE THE REAL A ROUND OF FINANCING, AND YOU WANT THEM TO VALUE UP TO A BILLION DOLLARS, BECAUSE THAT BILLION DOLLAR VALUATION WILL DO MORE TO YOUR ECOSYSTEM'S CREDIBILITY, YOUR CURRENCY PRICES AND LONG-TERM NARRATIVES THAN 50 RECIPIENTS COMBINED。

A16z Crypto invested $50 million in the core Solana Accord, Jito, in exchange for capital in exchange for currency, with the explicit aim of promoting long-term coherence between the two companies. This is the right path. Instead of a $50,000 grant for the milestone report in 90 days。

This is a bet on a company that really has an impact, and it is a stake in real money and money。

In 2025, global block-winding finance reached $35 billion, of which a16z Cripto and Pantera Capital received multiple rounds of significant financing. That's the pool where the windfall department needs to compete。

The developers are loyal to the users and the mobility

Another mistake made at the strategic level by the eco-financing model is that it assumes that the integrity of the developers can be acquired through non-diluting capital. Actually not。

The L1 activeness in 2025 was divided into different roles: Solana, BNB Chain and Hyperliquid captured a large amount of speculative financial flows, while their position as a clearing and data availability layer was reinforced by the Taifeng. The continued fragmentation of the base layer into professional chains covering privacy, performance and application chain coordination makes interoperability and cross-linking increasingly important。

The best builders have understood that. They are not loyal to a chain, but to users and mobility. They go where users are, where exit mechanisms are in place, where there are real trade volumes and financial flows。

And now it's a multi-chain reality. The winner of the next cycle will be those agreements and applications for meaningful integration on multiple chains。

The Layer-1 chain raised approximately US$ 27.1 billion between 2023 and 2025, of which nearly 48 per cent went to early projects. Investors continue to support the new implementation environment, but increasingly expect faster ecosystem delivery。

Markets are becoming increasingly intelligent, and they are abandoning their reliance on funding to support falsely dynamic ecosystems. What is now rewarded is real throughput, real users and real income。

SO, WHAT EXACTLY SHOULD L1 WINDWARD DO? ENTERING THE BEST COMPANIES AS EARLY AS POSSIBLE WITH EQUITY AND TOKENS, ENGAGING IN REAL STRATEGIC ENGAGEMENT IN A MULTI-CHAIN PORTFOLIO, AND MAKING THE INTEGRATION OF YOUR CHAIN PART OF THEIR ROAD MAP, RATHER THAN HAVING OPTIONAL COLLATERAL OPTIONS。

If you support a company that will make a difference, you will work with them to make your chain a natural home for their activities. You win that loyalty by being the best technological environment for them to build the product, not rent it with a financial check。

a billion-dollar company

Scenario A: You deployed $10 million over two years to fund 200 projects. Your quarterly board report contains data on daily activity, some GitHub activity, and a bunch of statements from teams active in Discord to optimize KPI funding。

TWO YEARS LATER, HALF OF THE PROJECTS EITHER DIED OR MOVED TO A PLACE WHERE THEY WERE TRULY MOBILE. YOUR TVL IS STAGNATING, AND THE DEVELOPER'S RETENTION DATA IS UNATTAINABLE. YOU REPORTED "FUNDING MORE THAN 200 PROJECTS", AND THEN YOU PRAYED THAT NO ONE WAS AFTER THEM。

SCENE B: YOU HAVE THE SAME $10 MILLION DEPLOYED IN THE FORM OF DIRECT EQUITY PLUS COINS TO 10 TRULY PROMISING COMPANIES IN YOUR ECOSYSTEM AND TO DEVELOP AN INTEGRATED ROAD MAP TO TIE THEIR SUCCESS TO YOUR CHAIN。

You provide real strategic support — not to catalyse milestone reports, but to introduce recruitment, token economics design, market access strategies. Three years later, one company valued $1 billion, while the other two valued $200 million each。

THAT BILLION-DOLLAR COMPANY IS A PROOF THAT EVERYTHING CAN CHANGE. IT CHANGES THE IDEA THAT OTHER BUILDERS BUILD PRODUCTS IN YOUR ECOSYSTEM, CHANGES THE IDEA THAT THE WIND SPENDS MONEY IN YOUR ECOSYSTEM, CHANGES THE VIEW OF THE EXCHANGE ON YOUR CHAIN PROJECT, AND CHANGES THE PERCEPTION OF THE MOBILITY PROVIDER (LP) OF YOUR TOKEN。

The gravitational force of a real breakthrough project is enormous, and its compounding effect is that 200 funded zombie projects can never be reached。

In the first quarter of 2025 alone, block chains and encryption start-ups raised $4.8 billion, the strongest quarter since the end of 2022. Creative firms that can prove their relevance, compliance and scalability can attract not only funding but also strategic partners and long-term support。

SMART CAPITAL HAS BEGUN TO FLOW TO REAL COMPANIES THAT CAN PRODUCE REAL RESULTS. L1 THE WIND INPUT SECTOR NEEDS TO BE INTEGRATED INTO THE CURRENT, RATHER THAN RUNNING PARALLEL FUNDING PROJECTS THAT ISOLATE ITSELF FROM THE CURRENT。

THE TARGET OF VANITY. DISCONTINUE REPORTING ON THE NUMBER OF PROJECTS FUNDED, START REPORTING ON PORTFOLIO VALUATIONS, INVESTMENT-INVOLVING TVLS, AND DEVELOPER RETENTION RATES THAT ARE GENUINELY LINKED TO ORGANIC GROWTH, RATHER THAN TO INCENTIVE SCHEMES。

A strict distinction is made between infrastructure support and corporate investment. Some are worth financing — real open-source public goods, core infrastructure, security research. These are real public goods that benefit everyone in an ecosystem and do not require a business model. But what about a DeFi protocol or a game app? That's a company. To invest in it like a company。

Whoever's still throwing money will be out

THE L1 PATTERN IN 2026 IS SIGNIFICANTLY DIFFERENT FROM THAT IN 2021. THE TOTAL MARKET VALUE OF THE L1 PLATE HAS STABILIZED ABOVE 2.96 TRILLION DOLLARS, AND COMPETITION HAS SHIFTED FROM THEORY TO PRACTICAL APPLICATION, STABLE CURRENCY PAYMENTS, GAMES, SUSTAINABLE CONTRACTS DEX, CREATOR TOOLS AND SPECIFIC APPLICATION CHAINS. WINNERS ARE OPENING THE GAP THROUGH THROUGH THROUGHPUT, COST, DECENTRIZATION AND DEVELOPER ATTRACTION。

The era of financing makes sense in the cold start-up era. That time is over. The rest is true competition for the best builders, best agreements, the most real economic activity. You cannot win this race by being the most generous funding committee。

You win because you have a truly great company, and they choose your chain (usually among the many options) because it's the best place to build, and they stay because you're the right long-term partner。

L1 IN THE NEXT 18 MONTHS WILL LOOK LIKE A VISIONARY. THE L1S, WHICH CONTINUE TO FINANCE PROJECTS AS THEIR MAIN ECOSYSTEM DEVELOPMENT STRATEGY, WILL EVENTUALLY BE EXPOSED: THEY MISTOOK DYNAMISM FOR VALUE CREATION AND PAID HUNDREDS OF MILLIONS OF DOLLARS FOR THAT SELF-DECEPTION。