Challenges and Opportunities in the Crypto Assets Infrastructure Sector

Current Market Conditions

The Crypto Assets infrastructure sector is experiencing significant market fatigue. After years of rapid growth, the valuations of infrastructure projects are shrinking, and investors are becoming more cautious. This reflects the gradual maturation of the market, where high valuations can no longer be achieved solely through technological innovation.

Innovation Dilemma

Current infrastructure projects face a critical issue: most provide similar functions with low differentiation. Despite technological advancements, there have yet to be breakthrough use cases that can support entirely new categories of applications. The ecosystem struggles to offer sufficient value propositions for mature internet platforms to migrate to the blockchain. Besides decentralization, these platforms have little incentive to fundamentally change their existing operating models. This fundamental adoption gap has led to trading and speculation becoming the dominant applications of most infrastructure layers, limiting the potential for transformation in the field.

Overbuilding of Infrastructure

Many infrastructure projects focus too much on forward-looking technological innovations while neglecting the actual needs of developers. They often overemphasize elements beyond core functionalities, such as privacy protection and verifiability. This forward-thinking technological approach overlooks the importance of short-term market acceptance and practical applications, not only increasing the difficulty of early market promotion but also making it challenging for projects to obtain effective user feedback and validation.

The surge in infrastructure projects has created a paradox - too many platforms competing for too few attractive applications. This imbalance has led to a large number of "ghost chains" with extremely low usage rates and almost no revenue, creating unsustainable economic models that rely primarily on token appreciation rather than true utility.

In contrast, cloud computing directly responds to the verified needs of the market, namely how to efficiently manage server resources with different configurations, times, and locations. Cloud computing platforms meet the actual demands of developers in terms of rapid deployment, elastic scaling, and cost optimization through modular and interface-based server resources, database management, and storage services. It is precisely because it addresses the pain points of enterprises and developers that cloud computing technology has rapidly gained market recognition and ultimately developed into an important infrastructure supporting the internet economy.

Feedback Loop Breakdown

A healthy encryption ecosystem requires an efficient feedback loop between application developers and infrastructure builders. Currently, this loop has been broken - application developers are troubled by infrastructure constraints, while infrastructure teams lack clear signals to understand which features can drive actual usage. Restoring this feedback mechanism is crucial for sustainable growth. Despite these challenges, infrastructure development remains lucrative, with 35 of the top 50 crypto assets maintaining their own infrastructure layers. However, the standards for success have significantly increased - new infrastructure projects must simultaneously demonstrate concrete use cases, substantial user appeal, and compelling narratives to achieve meaningful valuations.

Recent Successful New Infrastructure Projects

In the past year, some infrastructure projects have achieved significant results through TGE or large-scale financing. These projects represent the most influential new infrastructure in the primary and secondary markets:

blockchain infrastructure

• Movement: MoveVM Ethereum Layer2
• Berachain: Liquidity Proof, EVM compatible Layer 1
• Monad: High-performance EVM compatible Layer1
• Solayer: High-quality re-staking based on the Solana ecosystem, ultra-fast SVM
• Succinct: ZK proof generation network and ZKVM

Emerging Infrastructure

• Walrus: Blob Storage Solution
• Aethir: GPU Computing Network
• Double Zero: Decentralized Physical Fiber Optic Network Facilities
• Eigenlayer: Provides Ethereum's security for new protocols
• Humanity: Digital Identity Protocol Platform

The bridge between Web2 and Web3

• Ondo: RWA Layer2
• Plume: RWAFi Blockchain
• Story: AI-driven IP programmable platform

Core Observations and Analysis

Market Maturity and Valuation Restructuring

The most significant characteristic of the current market is the shift in valuation logic. The early model that relied solely on technical narratives and high FDV( fully diluted valuation) to attract investment is facing severe challenges. Many projects exhibit characteristics of high FDV, low circulating market cap, and low trading volume. This indicates that a large number of tokens unlocking in the future will bring continuous selling pressure, and even if projects make technical progress, prices may drop due to token dilution, further eroding user confidence and forming a negative feedback loop.

Even successful projects seem to face an invisible ceiling of about 10 billion USD in valuation. This means that for investors, achieving excess returns requires entering at an extremely early stage with a valuation below 50 million USD, highlighting the importance of timing and early judgment. The market is no longer easily willing to pay for pure potential; it demands clearer proof of value.

( Execution power outweighs first-mover advantage

Not all projects that create new narratives can achieve the highest valuations. For example, while Double Zero, Story, and Eigenlayer are pioneers in their respective fields, many subsequent projects have obtained comparable or even higher valuations through stronger execution, better market timing, or more optimized solutions. This indicates that in an increasingly crowded market, the importance of high-quality execution, effective market strategies, and grasping timing is becoming more prominent.

) Technological Pragmatism Rising

The technological development direction of infrastructure shows a clear pragmatic tendency, with the market favoring solutions that can solve real problems, optimize existing paradigms, or effectively connect to the real world. Although the market seeks breakthrough innovations, the demand for optimization of core blockchain performance remains strong. Projects like Monad, Movement, Berachain, and Solayer have gained significant valuations by enhancing the performance of existing virtual machines.

Projects that connect with real-world applications and assets demonstrate strong market appeal. Ondo and Plume focus on RWA, while Story emphasizes the programmability of IP; these projects have all achieved high valuations. They apply blockchain technology to proven Web2 concepts, injecting programmability, global liquidity, and new financial possibilities, lowering the understanding threshold for users and broadening the application scenarios.

From the perspective of target use cases, finance ### DeFi, RWA ###, and artificial intelligence ( AI ) are currently the two most recognized areas in the market that can support high valuation infrastructures. This indicates that infrastructures capable of providing underlying support for these two high-potential fields are more likely to attract capital and market favor.

( Ecological Synergy and Precise Narrative

In addition to technology and market positioning, building a strong ecosystem and conducting effective market communication have become key levers for the success of infrastructure projects. The vast majority of projects valued at over $1 billion are committed to building or integrating a dedicated ecosystem. An ecosystem with multiple composable projects can create value far beyond isolated solutions, forming a positive cycle that attracts more users, developers, and capital.

Infrastructure needs to cater to both end users and developers, as their needs and concerns are completely different. Successful projects often adjust their communication strategies based on different audiences to effectively convey their value propositions.

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Future Investment Opportunities

( Targeting the underserved Web2 market

The most promising infrastructure opportunities will target large Web2 markets that are not yet well served by blockchain solutions. These projects can create globally accessible markets while introducing improved financialization mechanisms.

) Create a new category of infrastructure

Compared to gradually improving existing infrastructure, a brand new category of infrastructure will generate significant value, for example:

• Intent-based infrastructure: Protocols that allow users to express desired outcomes rather than specific transactions, automatically handling execution optimization.
• Add privacy to each blockchain, the HTTPS infrastructure of Web3.

infrastructure that meets user needs and provides stable income

As the blockchain industry matures, the long-term value of infrastructure is gradually returning to its core function: meeting the real needs of users and generating sustainable income. The early market frenzy may have been based on expectations and technological narratives, but ultimately, infrastructure that cannot effectively serve users and establish robust economic models will struggle to sustain itself.

A continuous revenue stream is the lifeblood of a project's healthy operation. It not only needs to cover high operating costs but should also provide real returns for ecosystem participants, such as for token buybacks and incentives for participants. Currently, some leading Layer 2 solutions like Base and Arbitrum have achieved considerable protocol revenue. However, due to changes in investor preferences during this cycle, their token prices remain relatively low, reflecting a mismatch between revenue and valuation.

Web2 APP actively integrates blockchain

Creating revolutionary applications from scratch requires a significant amount of time and resources. A more efficient approach imitates the recent AI revolution: directly integrating blockchain capabilities into existing Web2 applications. Blockchain infrastructure must prioritize seamless integration pathways, allowing Web2 applications to gradually implement blockchain functionalities without disrupting their core user experience.

Financial incentives may drive this wave of integration. Just as AI capabilities help Web2 companies create advanced tiers and new revenue streams, blockchain integration can unlock new monetization models through tokenization, fractional ownership, and programmable royalties. Infrastructure that makes these benefits easily accessible while minimizing technical complexity will catalyze the next phase of blockchain adoption in mainstream applications.

![From narrative fatigue to valuation shrinkage, analyzing the current challenges and opportunities of Crypto Assets infrastructure]###https://img-cdn.gateio.im/webp-social/moments-4f2363a4da9165564d87aa890c1a9e29.webp###