New L1 Ecosystem Bootstrapping Is Harder And Incentives Are Being Redesigned
Key takeaways
- The market has learned that large grant and incentive programs for generic forks were usually a waste of money and teams are reducing these repeated cash burns.
- Even in a best-case scenario, the timeline for fully realizing regulated 24/7 on-chain equities trading is unclear and could be two to five years away.
- Crypto wallets such as Phantom and Rabby are evolving into mobile-exchange-like apps that can compete with centralized exchanges by integrating trading and taking a cut.
- MegaETH announced a global stress test aiming to process 11 billion transactions in seven days.
- Bank-to-onchain payment apps tend to be forced to charge fees unless they can cross-subsidize with other revenue streams.
Sections
New L1 Ecosystem Bootstrapping Is Harder And Incentives Are Being Redesigned
The corpus claims reduced developer appetite for generic DeFi forks on new L1s and a learned aversion to large, undifferentiated grants. It emphasizes mechanisms that make naive incentive programs fail in crypto: volume-based points can be gamed, Sybil resistance is difficult without KYC, and large capital can bargain for preferential terms and rotate. More targeted, retention-oriented programs and revenue-funded incentives are presented as more viable, and incentive design expertise is flagged as an emerging competitive lever.
- The market has learned that large grant and incentive programs for generic forks were usually a waste of money and teams are reducing these repeated cash burns.
- Crypto lacks a widely shared body of work on incentive program design, and hiring dedicated incentives and strategy expertise may become a key competitive advantage for product-focused teams.
- Targeted loyalty, referral, and activity-based rewards are more likely to create stickiness than large one-time airdrops that recipients quickly sell and abandon.
- Points or rewards tied directly to trading volume are easily gamed in crypto through wash trading and delta-neutral strategies that inflate volume with limited economic cost.
- Large TVL syndicates can negotiate preferential yields and token APRs, then rotate capital across platforms to farm incentives and leave once rewards decline.
- Developer interest in launching common DeFi primitives on new L1s has declined, and new chains now often have fewer DEX and lending forks than in prior cycles.
Regulated 24/7 Equities And Tokenized Settlement
Two major exchanges are described as pursuing 24/7 trading and, for NYSE, a tokenized stock platform using multiple chains. Regulation is an explicit gating condition, and throughput constraints imply that any meaningful onchain settlement likely needs batching or rollups rather than L1-only settlement. Timelines are presented as uncertain and multi-year, so near-term readthrough is limited to monitoring approvals, pilots, and technical architecture disclosures.
- Even in a best-case scenario, the timeline for fully realizing regulated 24/7 on-chain equities trading is unclear and could be two to five years away.
- The New York Stock Exchange has announced plans for a 24/7 blockchain platform for tokenized US stocks and said it will use multiple blockchains.
- The NYSE on-chain tokenized stocks initiative requires SEC approval.
- Settling a meaningful volume of equity-trading transactions directly on Ethereum mainnet is likely infeasible due to throughput limits, implying a rollup or batching approach would be needed.
- Nasdaq has announced plans to move to 24/7 trading at some point.
- Within roughly three to four years, a meaningful share of trades could be settled on L1 blockchains while being accessed through mainstream brokers.
Distribution Shifting Toward Wallets And Incumbents
Wallets are described as expanding into exchange-like experiences that can internalize trading and capture fees, and Phantom is presented as an execution and integration leader with broad ecosystem coverage. At the same time, Phantom’s stablecoin usage is described as relatively low, which weakens near-term expansion via stablecoin float or rails. Incumbent product terms described for Robinhood raise the competitive bar for crypto-native finance apps and may compress margins where incumbents can subsidize.
- Crypto wallets such as Phantom and Rabby are evolving into mobile-exchange-like apps that can compete with centralized exchanges by integrating trading and taking a cut.
- Phantom supports ecosystems including Hyperliquid, Base, Polygon, and native Bitcoin.
- Phantom’s stablecoin has relatively low usage, with a reported market cap under $100 million and previously observed around $60–70 million.
- Robinhood offers near risk-free-rate yield on idle cash and allows fee-free, no-spread swaps between USD and USDC with on/off-boarding support.
- Phantom has compounded growth over roughly three years through consistent product shipping and integrations.
- Phantom equity seems more attractive than a Phantom token unless a token directly represents equity-like claims.
High-Throughput L1 Claims Versus Demand Reality (Megaeth)
MegaETH has specific public throughput targets and near-term test/launch events intended to demonstrate latency-sensitive performance under load. The corpus also emphasizes that one-off stress tests do not prove sustained throughput without durable demand, and it flags that activity could be driven by farming behaviors that inflate apparent usage. Expectations are set that even strong technical preparation may not translate into immediate attention in a saturated market.
- MegaETH announced a global stress test aiming to process 11 billion transactions in seven days.
- MegaETH plans to open its mainnet to users on the 22nd for latency-sensitive, high-throughput application usage under heavy load.
- MegaETH is targeting 15,000 to 35,000 true TPS and is comparing Solana to about 1,500 TPS when excluding vote transactions.
- Sustaining very high TPS on a new chain requires real demand, not just a one-off stress test event.
- The MegaETH stress test is expected to attract click-farming or similar behavior that can generate social momentum while stressing the chain.
- MegaETH should not be surprised if its day-one launch draws limited interest even if its preparation for new applications is strong.
Payments/On-Ramp Unit Economics And Cross-Subsidy Constraints
The corpus describes a structural pressure for bank-to-onchain payment apps to introduce fees unless they have other revenue streams to subsidize the service, with Sphere Pay cited as an example. In parallel, an incumbent is described as offering fee-free, no-spread stablecoin swaps and yield on idle cash, implying that standalone apps may face margin compression where incumbents can subsidize consumer-friendly terms.
- Bank-to-onchain payment apps tend to be forced to charge fees unless they can cross-subsidize with other revenue streams.
- Sphere Pay moved from long-running zero fees to charging fees.
- Robinhood offers near risk-free-rate yield on idle cash and allows fee-free, no-spread swaps between USD and USDC with on/off-boarding support.
Watchlist
- Even in a best-case scenario, the timeline for fully realizing regulated 24/7 on-chain equities trading is unclear and could be two to five years away.
- Crypto lacks a widely shared body of work on incentive program design, and hiring dedicated incentives and strategy expertise may become a key competitive advantage for product-focused teams.
- An episode featuring Morpho and Maple to discuss DeFi credit risk is planned to air next Monday.
Unknowns
- What specific SEC approvals, filings, or rule changes would be required for NYSE’s tokenized equities and 24/7 blockchain platform, and what is the expected review timeline?
- Which blockchains, rollups, or data availability choices would NYSE use, and what trade batching/settlement model would it implement?
- If exchanges and brokers move toward 24/7 trading, what intermediate rollout steps will occur before full 24/7 coverage?
- Will mainstream brokers actually adopt onchain settlement in the described multi-year window, and if so, for which products and what fraction of volume?
- In practice, where will economic value accrue in onchain trading: consumer applications via take rates, or L1/L2 infrastructure via scale and fees?