Alt Layer 1 Blockchains in Crisis: Do We Need More in 2025?

Picture this: a $350 million startup launches with all the bells and whistles, yet barely anyone shows up to use it. That’s the harsh reality for many alternative Layer 1 (L1) blockchains today, as they grapple with an existential crisis in a market ruled by Ethereum and Solana. With over 470 blockchain networks vying for relevance, the question isn’t just whether they can survive—it’s whether we even need them at all.

• Overcrowded Market: Over 470 blockchain networks exist, but only 55 have a Total Value Locked (TVL) above $100 million.
• Struggling Heavyweights: Despite massive funding, projects like Aptos show declining metrics and negligible real-world use.
• Glimmers of Hope: Berachain and Sui hint at potential with DeFi growth and high trading volumes, but sustainability remains in doubt.

The Alt L1 Overcrowding Problem

Layer 1 blockchains are the foundational networks—think Bitcoin and Ethereum—upon which decentralized applications (dApps) and scaling solutions are built. They’re the bedrock of the crypto world, handling everything from transactions to smart contracts, which are self-executing agreements coded on the blockchain. Since Ethereum pioneered smart contracts in 2015, sparking a revolution in decentralized finance (DeFi) and beyond, the space has exploded with alt L1s, each claiming to outdo the last. According to DeFiLlama, over 470 such networks now operate, yet only 55 boast a TVL—total assets locked in their ecosystems as a measure of trust and usage—exceeding $100 million. That’s a damning statistic, revealing a landscape where most players are barely scraping by.

The boom of alt L1s, fueled by the 2017 ICO craze and relentless venture capital (VC) investments, promised innovation: faster transactions, cheaper fees, better scalability. But as we sit in 2025 amidst a brutal crypto downtrend, the hype has faded, exposing a fragmented mess. Many of these networks are ghost towns, propped up by marketing rather than utility. Fragmentation splits developer talent, user attention, and capital—resources that could strengthen established ecosystems. So, why are so many alt L1s failing to deliver, and is there room for more in a market already dominated by giants? For a deeper dive into this debate, check out this analysis on the existential crisis facing alternative L1 blockchains.

Case Study: Aptos and the Failure of Hype

Let’s zoom in on Aptos, a poster child for alt L1 struggles. Having raised a staggering $350 million, Aptos launched with bold claims of scalability and developer-friendly tools. Yet, its current TVL sits at $539 million, down from a peak of $753 million, while daily chain fees have slumped to just $1,981 from $3,290. Daily revenues are a paltry $30,337, with app fees at $109,787—hardly the returns investors might expect. So, where did all that money go? Social media cuts to the chase, with X user 0xhantengri summing up the sentiment:

“can’t name a single app that people actually use.”

That stings, but it’s hard to argue. Low app usage signals a deeper issue: Aptos lacks a compelling reason for developers or users to choose it over Ethereum or Solana. Critics point to inflated metrics, suggesting much of the activity might be wash trading—artificial trades to fake volume—or speculative airdrop farming, where users chase free tokens without real engagement. Think of it as faking sales at a garage sale to lure buyers; it’s deceptive, and it’s a red flag across many alt L1s. Without genuine adoption, Aptos isn’t a blockchain—it’s a $350 million question mark.

Flickers of Hope: Berachain, Sui, and Niche Success

Not every alt L1 is drowning. Berachain, for instance, has seen its TVL surge 16% to $3.4 billion, per Messari data, thanks to savvy DeFi integrations. Its focus on decentralized exchanges (DEXs) and yield farming protocols—systems where users earn rewards by lending or staking assets—has attracted liquidity, though whether this is sustainable or just another hype bubble remains unclear. Similarly, Sui clocks weekly DEX volumes over $1 billion, hinting at market traction. Its architecture prioritizes high-throughput transactions, appealing to traders who need speed, but volume alone doesn’t equal loyalty or long-term value.

Then there’s Sonic Labs, which raised $150 million for U.S. expansion, targeting cross-border scalability—think seamless international payments or remittances on-chain. Monad, still in testnet, is generating buzz with parallel transaction processing, a tech that handles multiple transactions simultaneously to rival Solana’s blistering speeds, backed by infrastructure from Avail Nexus. And let’s not forget Hyperliquid, a rare bootstrapped success that carved a niche without endless VC handouts. These cases suggest alt L1s might survive by focusing on specific use cases—DeFi, speed, or underserved markets. But high numbers today don’t guarantee relevance tomorrow; fundamentals must hold when the hype fades.

Ethereum’s Layer 2s: Squeezing Out Alt L1s

Here’s a bitter pill for alt L1s: Ethereum’s Layer 2 (L2) solutions are eating their lunch. L2s are secondary networks built atop Ethereum to handle transactions off the main chain, slashing costs and boosting speed while inheriting Ethereum’s security. Think of them as bundling a hundred letters into one package before mailing—it’s efficient. Technologies like Optimistic Rollups and Zero-Knowledge Rollups have made Ethereum scalable without sacrificing decentralization, addressing the very pain points many alt L1s were created to solve. Solana, too, offers raw performance with sub-second transactions at a fraction of the cost. So, if Ethereum and Solana are already solving scalability and cost, what’s the point of a new L1?

For many alt L1s, the answer is painfully absent. They’re not just competing with each other—they’re up against L2s that leverage Ethereum’s massive developer base and user trust. Aptos or Sui might boast fancy tech, but they lack the ecosystem gravity of an Ethereum or even a Solana. Without a unique value proposition—say, a niche no one else touches—they’re fighting a losing battle.

Bitcoin’s Shadow: Simplicity as the Ultimate Standard

As a Bitcoin maximalist, I’ll always root for BTC as the bedrock of decentralization. Bitcoin doesn’t try to be everything; it’s a store of value, a middle finger to centralized finance, and a model of simplicity. Alt L1s, by contrast, often overpromise with convoluted roadmaps—scalable this, interoperable that—yet deliver little. Bitcoin’s laser focus is why it endures while others flounder. Still, I’m not blind to the need for experimentation. Ethereum carved out DeFi and smart contracts; Solana pushed speed. Even failed alt L1s drive innovation by forcing giants to adapt or risk stagnation. The catch? Most of these experiments are wasteful vanity projects, burning capital that could bolster what already works.

Bitcoin doesn’t need to touch DeFi or scalability gimmicks—that’s not its lane. But alt L1s must justify their existence beyond “we’re not Ethereum.” If they can’t, they’re just noise, diluting the mission of a decentralized future. The graveyard of failed blockchains is growing, and frankly, a cull might be exactly what we need.

Interoperability: A Lifeline via Cosmos and Polkadot?

One potential salvation for alt L1s lies in interoperability—systems that let blockchains talk to each other, sharing data and value without silos. Cosmos, with its app-specific chain model, offers a blueprint. Instead of every L1 fighting as a standalone kingdom, Cosmos enables specialized chains for specific uses—say, one for gaming, another for payments—that plug into a broader network via its Inter-Blockchain Communication (IBC) protocol. Polkadot takes a similar “parachain” approach, where niche chains connect to a central relay for security and cross-chain functionality.

For struggling alt L1s, this could be a game-changer. Rather than competing with Ethereum or Solana head-on, why not integrate? Build a niche, connect to a bigger ecosystem, and stop reinventing the wheel. Fragmentation is the silent killer of blockchain progress; collaboration might be the cure. But it requires swallowing pride and ditching the “we’re the best” rhetoric—a tall order for projects fueled by ego and VC dollars.

A Path Forward or a Dead End?

Let’s not mince words: the VC model of churning out alt L1s with zero regard for user adoption or financial health is borderline predatory. Too many are propped up by token inflation and airdrop stunts, masking a lack of substance. And those absurd price predictions—$50K tokens by next month? Pure grift, preying on the gullible. If we’re serious about building the future of finance, alt L1s must solve real problems. Transparency in funding and development isn’t optional; it’s mandatory. User-centric design—apps people actually want—must trump whitepaper fantasies. And partnerships, not rivalries, could keep them afloat.

Looking to 2025, the outlook is grim but not hopeless. Regulatory pressures might crush weaker players, while market consolidation could favor the strong. Tech breakthroughs, like wider zero-knowledge proof adoption for privacy and scaling, might give alt L1s new tricks to play. But the clock is ticking. With the crypto winter biting, the next few months will separate the innovators from the imposters. Will the alt L1 graveyard grow, or will a few rise from the ashes? Only time—and hard data—will tell.

Key Takeaways and Questions for Reflection

• What is driving the crisis for alternative Layer 1 blockchains?
  Alt L1s face irrelevance in a market dominated by Ethereum and Solana, with most unable to secure user adoption or sustainable ecosystems despite heavy VC funding.
• Why are heavily funded projects like Aptos struggling?
  Despite $350 million raised, Aptos shows declining TVL, minimal app usage, and low fees, often criticized as speculative hubs rather than functional networks.
• Which alt L1s show potential for survival?
  Berachain’s $3.4 billion TVL from DeFi integrations and Sui’s $1 billion weekly DEX volumes offer hope, but long-term success depends on lasting fundamentals.
• Do we need more Layer 1 blockchains in 2025?
  Probably not, as Ethereum’s L2 solutions and Solana already tackle scalability and cost, leaving alt L1s to prove unique value or risk becoming obsolete.
• How can alt L1s overcome their challenges?
  They need to focus on real-world use cases, ensure transparency in operations, and embrace interoperability with ecosystems like Cosmos to build trust and utility.