The ideal has come to an end: Why is the crypto industry collectively becoming homogenized?

The chart shows the changes in Farcaster's daily active users, posting/interaction/linking volume. After peaking in March 2026, the platform's daily active users and on-chain interaction scale continued to decline, and the market enthusiasm for decentralized social networking gradually cooled down.

Decentralized social networking is the most direct practical application of the "user-owned internet" concept. It promises users control over their own social relationship graph, permissionless access, and censorship resistance, giving rise to projects such as Farcaster, Lens, and DeSo. However, apart from the users brought in by token incentives in the short term, projects find it difficult to retain real users, and overall activity has declined significantly. InfoFi, pioneered by Kaito, links online attention, content creation, and economic rewards. While it initially produced a significant amount of high-quality content, subsequent rampant practice of artificially inflating traffic for profit led to a proliferation of spam. After the X platform shut down its related interfaces, 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 regarded as digital gold by some in the market; the traditional financial industry has also begun to actively adopt blockchain as the next-generation financial infrastructure. Blockchain has finally found its own product-market fit. The Era of On-Chain Experimentation Ends: Crypto Projects Shutting Down or Transforming in 2026

The industry previously generally believed that the various idealistic experiments would have largely ended by 2024-2025. The market shifted from grand narratives to tracks like stablecoins and asset tokenization, where business models were easier to implement, and the ideals of the previous cycle gradually faded from public view.

However, the reality continued to deteriorate: innovation had stagnated, capital and traffic began to withdraw, but older projects could still barely keep operating by relying on remaining funding and business inertia. Recently, however, these older projects have truly reached their end, with many initiating transformations or shutting down altogether.

As the table shows, in 2026, centralized exchanges, data tools, public chains, layer 2 networks, infrastructure, DeFi, games, and NFTs—almost the entire crypto space—experienced a wave of closures and transformations. The idealistic experiments of the crypto world have truly come to an end. The digital world envisioned by idealists has ultimately failed to materialize. The market has formed a barbell-shaped bipolar structure, with sectors converging. This scatter plot shows the year-on-year changes in key indicators, with the market moving towards both ends: speculative and traditional financial RWA sectors saw significant data surges, while traditional crypto sectors such as native on-chain DeFi, NFTs, and restaking experienced substantial data contractions, indicating a decline in the middle sectors. After countless on-chain experiments failed, the crypto industry evolved into a polarized barbell structure. One end caters to users' speculative demands; the other end supports the stable business needs of the real economy. Those native on-chain businesses in the middle, with unclear risk-return characteristics, have performed poorly in various operating data, due to three core reasons: **Lack of Product-Market Fit:** As mentioned earlier, the vast majority of on-chain products have not successfully implemented Proof-of-Function (PMF). Some seemingly successful cases, upon closer examination, were merely a false boom fueled by early airdrop activities. Products that can truly create value and continuously provide utility to users are extremely rare. **Risk-Reward Ratio Continues to Deteriorate:** With the crypto market weakening, users are gradually distinguishing which models are feasible and which are merely pseudo-demands. Expected returns from ordinary DeFi mining have declined significantly. Previously, stablecoin mining could achieve annualized returns of 15-20%; now, even 5-10% annualized returns are extremely difficult to obtain. The appeal of the middle-ground sector has completely disappeared. Users are divided into two groups: either turning to RWA, accepting low-risk returns of 3-7%; or flocking to Meme Coin, perpetual contracts, and prediction markets, taking on high risks to seek excess returns. **Increased Risk of Hacking:** With the iterative upgrades of large-scale AI models, on-chain hacking incidents are becoming increasingly frequent. The already shrunken expected returns, coupled with the risk of principal theft, further weaken the appeal of ordinary on-chain products. Data from two extreme sectors bucked the trend and rose, as if the bear market had never arrived. Some businesses are highly tied to crypto market conditions; others have built independent business models, unaffected by token price fluctuations. This has created a barbell-shaped development pattern for the entire industry. Speculative Demand: Speculation is not unique to the crypto industry. While speculative targets constantly change, human nature remains constant. From tulip mania and land speculation to stocks and cryptocurrencies, speculative demand has always existed. The characteristics of smart contracts, on-chain transparency, and instant settlement make blockchain a prime vehicle for speculative behavior. After the decline in the appeal of traditional DeFi, a large number of traditional DeFi users have flocked to speculative sectors, with representative categories including Meme coins, prediction markets, and decentralized perpetual contract (DEX) contracts. The market demand for Meme Coin has continued since Dogecoin in 2013: DOGE→SHIB→BONK→PEPE. In 2024, the Solana ecosystem's WIF, POPCAT, MEW, GOAT, and FARTCOIN sparked a Meme Coin craze. What truly reshaped the industry landscape was shturl.c, launched in 2024, which allows anyone to issue Meme Coins with a single click. The bar chart shows the revenue trend of the shturl.c platform. Even with market fluctuations, the revenue of this Meme coin issuing platform has remained high for a long time. In August and September 2026, revenue even surged to over $2 million, demonstrating the continued popularity of the Meme sector. While spot DEX trading volume has plummeted by nearly 80% in the past year, shturl.c's revenue has shown remarkable resilience, more than doubling from its low point in the past month. The platform has implemented a "graduation" mechanism: once a token's market capitalization reaches a threshold, it migrates from the glue curve to the AMM liquidity pool. The percentage of tokens that successfully graduate has increased from an average of less than 1% to over 3%. The image shows the daily spot trading volume breakdown for July. Meme Coin (bright yellow) initially had a very high share, and although it gradually declined, it remains the most traded asset on the chain, exceeding the trading volume of ETH (stablecoins) and tokenized assets. The newly launched Robinhood Chain was initially positioned as a public chain for tokenizing real-world assets. However, the vast majority of its trading volume comes from Meme Coin. Blockworks statistics show that more than half of the spot trading volume after launch was contributed by Meme Coin. Ironically, Meme Coin has become the growth engine of this RWA-focused public chain. The chart shows the net revenue trend of the Fomo platform. Starting in June 2025, revenue surged in the second half of 2026, confirming the rapid expansion of the Meme trading platform. Also noteworthy is the Fomo platform, created by former dYdX employees. It has a low barrier to entry, allows for quick discovery of Meme coin projects, features a social news feed, and supports Apple Pay. The platform's daily revenue exceeds $400,000. shturl.c, Robinhood Chain, and Fomo all confirm one thing: regardless of market fluctuations, the market demand for Meme coins remains strong. Previously, participating in Meme Coin had a high barrier to entry: it required discovering opportunities in X and Telegram communities, using Dexscreener to query data, connecting your wallet to a DEX, and then executing trades. Participants were primarily users within the DeFi community. Now, with TikTok spreading Meme culture and the app supporting direct token purchases via Apple Pay, ordinary users outside the DeFi community can easily enter the market. The decline in traditional DeFi yields, coupled with the lowered entry barrier, has allowed Meme Coin to grow into a relatively independent sector less affected by overall market conditions. The image shows the monthly trading volume of prediction markets. Platforms like Kalshi and Polymarket drove the market to surge from almost negligible in 2024 to the $50 billion level by mid-2026, marking an explosive growth for the sector. Prediction markets were among the fastest-growing sectors in the past year: trading volume surged by 3032% year-on-year and 320% within the year, showing no signs of slowing down. Valuations of leading platforms continue to rise: Kalshi, valued at $750,000 in 2019, has reached $22 billion in May 2026 after multiple rounds of financing, with its next round of financing targeting $40 billion. Polymarket's valuation rose from $18.58 million in 2020 to $15 billion, with its new round of financing targeting over $20 billion. A comparison of the transaction structures of Polymarket and Kalshi using a dual-ring chart shows that sports are the largest transaction category in both platforms; Polymarket has a higher proportion of crypto and political themes, while Kalshi's sports themes account for 74.48%. When discussing market prediction in the industry, its ability to discover information and hedge risks is often mentioned, but currently, the actual demand for these two types of services is very limited. Kalshi's trading volume mainly comes from sports events and crypto market data; Polymarket has a wider range of categories, but its main trading focus remains on sports, crypto assets, and political events. Comparing the accumulated open interest of sports and weather contracts with different timeframes, weather contracts see large-scale position building early on, while sports contracts mostly accumulate positions rapidly closer to expiration. A comparison of weather and sports contracts reveals their differences: weather contract users open positions early, leaning towards hedging; sports contracts see large-scale trading concentrated closer to the event, essentially a speculative activity. The rapid expansion of prediction markets during bear markets is largely due to the influx of new users from outside the crypto space. Statistics show that 56.1% of wallet addresses on Polymarket have never interacted with a DEX. While this doesn't mean all users are complete newcomers to crypto, a large number use prediction markets as their first blockchain experience. Sports and political events help platforms transcend the crypto cycle and acquire new users from outside. [Image of perpetual contract decentralized exchanges] Comparing the trading volumes of the two types of DEXs, after 2025, the trading volume of perpetual DEXs (blue) has consistently exceeded that of spot DEXs (red), indicating significantly stronger demand for derivatives trading compared to spot trading. While perpetual contract DEXs haven't experienced the explosive growth of Meme Coin or prediction markets, their resilience in a bear market, compared to other on-chain data, is remarkably strong. The decline in trading volume for perpetual DEXs is far less than that for spot DEXs, indicating that speculative demand for contracts is stronger than that for spot trading. This is primarily driven by two factors: New perpetual contract protocols continue to emerge: Following the success of Hyperliquid, new projects such as Lighter, Aster, Variational, Grvt, and edgeX have launched one after another. Even companies that didn't previously focus on the contract market, like Jito, Jupiter, and Ondo Finance, have added perpetual contract products. The market has developed a "use new protocols to get airdrops" strategy, continuously attracting users to the sector. The Rise of Real-World Asset Perpetual Contracts (RWA-Perps): Previously, only BTC and ETH were available as underlying assets. Driven by geopolitical conflicts and the AI ​​sector, major platforms are now offering commodities and US stock-related contracts. For example, while it's difficult for ordinary investors outside of South Korea to trade SK Hynix stock, they can trade perpetual contracts for that stock on Hyperliquid, which once enjoyed extremely high trading volume. The concept of perpetual contracts originated with BitMEX. Although BitMEX itself declined and faced closure, the perpetual contract market continued to expand. Coinbase, Robinhood, Kalshi, and traditional compliant exchanges like the Singapore Exchange (SGX) and the US CME have all begun to develop similar trading products. Connecting to the Real Economy: Market growth is not entirely driven by speculation. On the other end of the barbell lies a sector with a somewhat rigid model but steady development, deeply integrated with the real world. Stablecoins, RWA (Real-World Asset Tokenization), and Vaults (asset treasuries) have maintained growth despite overall declines in token prices and on-chain staking. Venture capital investment in native on-chain projects has seen a significant contraction in both the number of projects and the scale of funding; however, blockchain projects integrated with the real economy are seeing increasingly larger single-round funding amounts. Examples include Rain's $250 million Series C funding, Airwallex's $320 million Series H funding, Gauntlet's $125 million funding, and OpenFX's $94 million funding. This demonstrates that this sector has successfully established independent product-market fit, unaffected by the cycles of crypto bull and bear markets.

Stablecoins

The white line represents the total market capitalization of stablecoins, which has remained relatively stable. However, the stacked bars represent the stablecoin payment transaction volume, which has continued to rise sharply, reflecting the shift in the focus of stablecoin applications towards actual payments.

Contrary to popular belief, the total supply of stablecoins has only increased by about 11% in the past year and has remained relatively flat since October 2025. The rapid expansion of government bond tokenization and private lending tokenization has slowed the growth rate of stablecoin supply.

But this does not mean that the sector is facing obstacles. In the context of a market crash, maintaining the existing size is an achievement in itself. More importantly, payment scenarios are experiencing explosive growth.

Crypto payment cards like RedotPay, KAST, EtherFi, and Plasma One saw their monthly payment volume nearly triple from $438.1 million in July 2025 to $1.32 billion in July 2026. Stablecoins, initially just intermediaries in crypto transactions, are increasingly being implemented in real-world payment scenarios. They will also serve as the core currency for on-chain settlement within the RWA real-world asset tokenization system. The total scale of real-world asset tokenization continues to rise, with traditional assets such as US Treasury bonds and commodities being the main contributors to growth. This expansion is independent of the cryptocurrency market cycle itself. 2025-2026 is expected to be a breakout year for RWA. The market anticipates blockchain technology transforming outdated traditional financial infrastructure, with various real-world assets being put on-chain. Early targets primarily consisted of US Treasury bonds and money market funds, with simple product forms and on-chain logic; later, this expanded to private lending, and recently further extended to stocks and equity. The value logic of RWA's underlying assets is independent of cryptocurrency market trends. Leveraging its advantages of increased efficiency and lower barriers to entry, it can grow independently of the crypto cycle. Four Pillars has already provided in-depth analysis of the RWA sector in previous reports, so this article will not repeat that. The line chart shows the TVL (Total Value Limit) trend of selected vaults. After a round of correction, it has rebounded again, approaching its previous historical peak, indicating that the popularity of institutional custody vaults has returned to a high level. Unlike RWA, which directly connects to real-world assets, Vaults are attracting significant industry attention as a next-generation on-chain asset management module. Vaults lend funds to lending markets that accept RWA as collateral, thereby indirectly linking with the real economy. As of August 28, the price of Bitcoin had fallen 35% from its peak; however, the total value locked in Select Vaults was only 4% lower than its all-time high, proving that the Vault ecosystem is also exhibiting independent market trends. Early RWA focused on "asset issuance on-chain"; now, as the industry enters the asset application stage, the rise of RWA-backed lending will further drive market demand for Vaults. Why are cryptocurrency companies no longer popular? The table summarizes the business layout of mainstream crypto platforms. △ represents ongoing development, ○ represents mature products, and - represents no involvement, reflecting the industry's expansion into emerging tracks such as perpetual contracts, prediction markets, RWA, and stablecoins. This has led to an intriguing business phenomenon in the crypto world: blockchain companies with completely different backgrounds and initial business focuses are now developing almost identical products and competing fiercely with each other. Various platforms are launching perpetual contracts, prediction markets, supporting Meme coin trading, and developing stablecoins, RWA trading, and asset vaults. The underlying logic is quite straightforward: as analyzed above, only a few tracks can both significantly mitigate market volatility and generate substantial revenue. Even with the recent market recovery, the overall direction of the industry hasn't changed, and many crypto companies are flocking to these counter-cyclical tracks. However, this doesn't mean that native on-chain projects have completely failed. While many experiments have disappeared as mentioned earlier, a few projects still survive and have successfully established a product-market fit. EigenLayer continues to see significant ETH re-staking; many are pessimistic about the blockchain gaming sector, but MapleStory Universe continues to deliver impressive data. The on-chain ecosystem is forming a barbell pattern. From a negative perspective: only a handful of sectors remain with growth potential; from a positive perspective: it represents the maturation of some crypto businesses, finding their own business models. We look forward to more sectors reaching this stage in the future.