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We call this industry the “blockchain” industry. But people are fed up with too many chains. “No more chains, give us the apps!” the people clamor. “No,” whispers the evil venture capitalist as they hungrily eye the L1 premium. Today’s 0xResearch newsletter looks at the investing dynamics around chains and applications.
In other news…are you coming to Permissionless IV Brooklyn in June? Tickets are $399 (for now!), but you can get one for half price with a unique 50% off discount code if you successfully refer 5 new subscribers to the 0xResearch newsletter. Scroll down for details.
Crypto fundraising spiked to multi-year high in Q1:
Blockworks Research has launched a powerful new dashboard tracking crypto fundraising, M&A and debt deals — now enriched with RootData’s granular dataset that goes back to 2018. The chart highlights an eye-popping fundraising spike in March — the largest monthly total since January 2022.
But it’s a bit of a mirage. While most weeks have ranged between $100m and $500m in funding, the March surge — attributable to a $2 billion investment into Binance — towers over the rest.
Financial products led deal flow in Q1 2025, accounting for 65% of raised capital, up from just 21% the prior quarter. Coinbase Ventures and Amber Group have been particularly active, with 16 and 13 disclosed deals, respectively, in the past 90 days.
Whether you're tracking narrative shifts or major strategic acquisitions, the dashboard gives allocators a clear view of deal momentum.
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If you’re launching a new chain in 2025, expect plenty of skepticism on Twitter.
It’s what all the L1 blockchain raises in the last week had to confront.
Camp Network, an intellectual property-focused L1, raised $30m at a valuation of $400m.
Unto, an SVM-based L1, raised $14.4m at a valuation of $140m.
Miden, a zk rollup, raised $25m (undisclosed valuation).
“Another chain, why?”
The easiest explanation is “greed.” It's the fabled L1 premium!
Look at SUI’s price performance lately — what explains a $6.8b market cap token almost doubling in half a month?
We can all agree that it’s not based on fundamentals. Fees generated on Sui are at paltry lows compared to its highs last December.
Maybe I’m cherry-picking and SUI is an anomaly. Maybe the L1 premium is dying, but it’s not quite dead yet.
Until then, the incentives to launch new L1s still exist.
The second (and charitable) explanation is simply that founders launching chains have competing visions of how a chain should be optimized.
How should the execution environment be designed? How is MEV captured? What data availability layer to use? Should there be a standardized oracle or gas token?
These things aren’t trivial. They determine where application developers go to build, and make or break the long-term success of a chain.
Expecting protocol builders to agree is like getting a hundred people to agree on a buffet’s menu.
It’s not all technical, either — there are social layer considerations. Take for example Rogue, @fede_intern’s upcoming zk rollup that wants to have zero VCs, insider allocation and a completely fair launch like Bitcoin did.
Builders have different opinions. They launch their own chains. It’s as simple as that. That’s economic freedom. We should celebrate it.
A solution?
Yet, there may be some consolation in the fact that L1 valuations are already compressing.
One of the highest profile L1 raises last year was Monad. Valuations were undisclosed, but it was rumored to be at unicorn status according to Pitchbook, so that puts Monad in the range of a billion.
Or consider the Initia L1, which was valued at $350m last year.
These raises are nothing like what was seen in the last cycle.
Contrast this to when Avalanche reportedly raised at a valuation of $5.25b in 2022. Or Flow, which raised at a valuation of $7.6b.
These numbers are dramatically down for L1s.
Public markets have responded to the distaste for more chains, and private markets are correcting overtime. The free market is working.
The data checks out when we zoom out. The below chart shows a downward trajectory for total funding raised for blockchains.
For those frustrated with “too many chains” and would like to see none at all, it’s probably not a satisfying answer.
Tied to that frustration is also an underlying desire to see more applications.
Fun fact: Consumer apps ironically received the lion’s share of venture funding vs. infrastructure back in 2013-2017 (Joel Monegro’s Fat Protocol thesis was written in 2016).
Source: Outlier Ventures
That has, of course, flipped today. Is there some reason why application funding has fallen out of favor with VCs?
Take it from 1kx, which claims to be one of the most active investors in consumer apps.
1kx partner Peter Pan told me: “Applications live and die by their traction and follow through — it’s an immediate feedback loop. Whereas with infrastructure, you can continue to find funding in a pre-launch state based off existing market comps, and push reality further and further out.”
Pudgy Penguins, Axie Infinity, Off The Grid, Rodeo and Layer3 are some examples of apps that have surmounted that feedback loop, Peter said.
Application revenues are also collectively outpacing the underlying protocol’s revenue (measured by REV) on most chains today.
If free markets worked to correct L1 overvaluations, maybe the reverse can happen for application funding too.
Union’s improvements upon Tendermint consensus through CometBLS, coupled with ZK proving through Galois, allow for a broadly scalable, cost efficient, and low latency IBC implementation that is feasibly scalable across every existing blockchain, virtual machine and runtime. Union’s implementation offers modular crosschain interoperability without the need for trusted intermediaries.
ThorFi’s unwind reaches final phase
Thorchain’s long-awaited response to the ThorFi lending and savers program default has entered its “final phase” with the launch of TCY. This new token aims to address outstanding claims while realigning incentives for affected users.
The TCY token, which is staked to earn a share of protocol fees (10% of system income), represents a long-term solution rather than a one-time payout. Initially dollarized based on each claimant’s outstanding position at the time of the ThorFi pause, TCY tokens are issued on THORChain and automatically staked, with yield accruing in RUNE.
RUNE is trading near its January/February daily closing lows at around $1.19, though it’s up about 20% over the past month.
This move marks the culmination of the ThorFi unwind process, which aims to minimize disruptions while ensuring protocol sustainability. TCY is not just a compensation token, but a mechanism to allow former claimants to participate in the protocol’s future growth. By incentivizing users to hold and stake TCY, the initiative introduces deflationary dynamics through buybacks and yields from system income.
Outspoken supporter Erik Voorhees admires the Thorchain community's “resilience” in coming up with this plan.
“I think this is a good solution, reminiscent of Bitfinex's innovative LEO token, in which creditors can get material repayment while opportunists profit over time by providing the capital upfront,” Voorhees wrote.
After facilitating TCY claims, the community's next challenge is to get Thorchain’s adoption moving in the right direction again. TCY turns liabilities into a promise of future fee revenue, but that’s no guarantee. We’ll have to see how much RUNE actually flows into the TCY pool, track buybacks and continue to monitor governance. If system income stalls or policy shifts, TCY holders may find themselves holding an IOU whose payoff horizon drifts ever farther away.
— Macauley Peterson
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