An Ethereum L2, which originated from the NFT community, has announced its closure. Meanwhile, traditional financial assets are still continuously moving on-chain.
Several recent developments, which may appear unrelated, are revealing an increasingly visible trend: Not every aspect of crypto is growing. The application layer is undergoing elimination and restructuring, while stablecoins, on-chain funds, and public chain infrastructure continue to progress.
Among them, the Pudgy Penguins-supported Ethereum L2 Abstract has announced its closure, standing out as a notable project exit case recently.
Abstract previously aimed to build an ecosystem around consumption, culture, and on-chain applications, but as competition in the L2 sector intensified, the project ultimately chose to cease operations.
This does not mean the overall Ethereum L2 sector is cooling down, but it does highlight a reality that is becoming more evident:
Having a chain does not equal having users, and having an ecosystem does not necessarily mean continuous funding.
In recent years, many projects have attracted market attention by launching L2s, issuing tokens, or building independent ecosystems. However, as the market shifts from “storytelling” to truly assessing users, trading volume, and revenue, some projects lacking sustained demand have begun to exit.
Meanwhile, another path is advancing rapidly.
Fidelity has recently moved further by bringing portions of its treasury bond fund on-chain, allowing traditional financial products to gain more direct on-chain access.
These products are fundamentally different from the “crypto-native assets” of the past.
Behind them lie traditional financial assets such as US treasuries, while blockchain’s role is shifting from being purely a transaction network to increasingly serving as infrastructure for asset issuance, registration, transfer, and settlement.
The stablecoin field is seeing similar changes.
Arbitrum has chosen Paxos’ USDG, and the competition is not just about “one more stablecoin.”
For public chains, stablecoins represent trading liquidity, user entry points, and substantial on-chain capital. More importantly, the reserve assets behind stablecoins can generate returns, which brings a new focus for public chains:
How to keep the economic value generated by stablecoin reserves within their own ecosystem.
As a result, stablecoins are gradually shifting from being mere payment tools to becoming critical infrastructure for public chains vying for capital and revenue.
Meanwhile, Ethereum itself is continuing with its upgrades.
The next major Ethereum upgrade, Glamsterdam, has already been deployed on the Sepolia testnet, signaling that core development is steadily advancing toward the mainnet.
Looking at these developments collectively, it becomes clear that a marked divergence is emerging in crypto.
Abstract’s closure reflects the elimination of certain applications and L2 projects; Fidelity's fund moving on-chain signifies ongoing entry of traditional financial assets; Arbitrum’s competition over USDG illustrates public chains beginning to compete for the stablecoin economy; the Glamsterdam test demonstrates that foundational infrastructure continues to be upgraded.
This may be the next key change to watch:
The focus of crypto competition is gradually shifting from “who can tell the bigger story” to who can truly support capital, assets, and transactional activities.
Projects may shut down, narratives will rotate, but if traditional financial assets continue to move on-chain, stablecoin scale keeps expanding, and public chains persistently improve infrastructure, then on-chain finance itself will likely remain a long-term main theme.
In other words, it may be a specific project that exits— but not necessarily the act of 'going on-chain' itself.
