Real Vision Founder: Why Most Public Chains Are Destined to Die?
Original author: Raoul Pal, Founder of Real Vision
Original compilation: Chopper, Foresight News
In your portfolio, there's surely an L1 blockchain you bought during the last cycle because you believed it would become the next Ethereum. Better technology, combined with the founder's highly persuasive claims on podcast episodes... You weren't foolish for buying it—plenty of smart people did the same.
But looking back now, this chain is essentially a ghost town. Only a handful of validator nodes are still running, a few hundred wallets are transferring small amounts of tokens back and forth, and the token price has long fallen far below what believers paid to buy in.
According to CoinGecko, as of the end of last year, more than 13 million tokens had ceased trading, with the vast majority dying in 2025. And many of the public chains they were built on have met the same fate.
Over the past thirteen years, during every bear market, I've seen similar takes on social media. Crypto is a scam, it's always been a casino, I told you so.
But this mass extinction isn't a scandal—it's just base rates.
I wrote this in December 2020. At the time, I thought it was obvious, but others didn't see it that way. Tokens are simply the product of venture capital being marked to market in real time. If you hold early seed-round projects and the price is being repriced every second, you'll see exactly the same result: roughly 80% end up worthless, 19% create some value, and only 1% capture the vast majority of returns. The crypto market just live-streams this process for everyone to see, and that real-time price volatility makes it very easy to panic.
At the time, I applied the same standard to myself. If Real Vision had been valued in real time every single day since its founding, I suspect its value would have nearly gone to zero about six times. A project's value comes from adoption, and ultimately from revenue, and the vast majority of projects never reach that point. Most projects don't survive. That's reality—whether you like it or not, that's capitalism.
So the real question was never "will most public chains die?" They will. What truly needs thinking about is: which ones will survive, and how to identify them before the price gives you the answer.
We've seen this script before
Twenty-one years of writing experience has taught me to look for precedents, and the precedent to remember here is the dot-com bust.
In November 2018, with Bitcoin deep in a bear market, I wrote that this scene was extremely similar to the dot-com bubble of 2000 and 2001: grand ideas, but flawed business models. But ultimately, a phoenix would rise from the ashes. I was certain the crypto market would repeat this process, but I couldn't tell which projects were phoenixes and which were just ashes—and I said so honestly at the time.
Admitting you can't predict is the correct answer, because in 2000, no one could pick out the eventual winners. Infrastructure was massively overbuilt, the Nasdaq plunged 78% from its peak over two and a half years, and the vast majority of stocks went to zero. But the few companies that rose from the ashes, leveraging the fiber-optic infrastructure built by those failed enterprises, grew into the largest companies in the world. In hindsight, the crash was just an interlude on the way up; but living through it made it feel like the entire industry's thesis was coming to an end.
Every major platform market since has ended the same way. In cloud computing, only about five top players remain; operating systems and mobile phones are similar, with the vast majority of value concentrated in the top four. Public chains are fundamentally the same as these platform markets.
An L1 blockchain is an economy, not just a token
Since it's a platform market, what is its product? The answer is simple: blockspace.
Winners make their blockspace more attractive through technology or narrative (or both), drawing more users and capital to flow on-chain. Everything else is just marketing packaging.
This is why you can't view a general-purpose public chain as a company, let alone simply as a token. Ethereum, Solana, and Sui are independent economies with their own GDP, money supply, and monetary policy. You should evaluate them the way you'd evaluate an economy—by looking at how much economic activity is actually being generated on-chain.
Four paths to survival
The competitive landscape is far simpler than most people imagine. For a project to survive, there are only four paths:
First, become an independent economy. Ethereum, Solana, Sui, and a handful of other public chains have sufficient throughput, composability, and developer density to support a global token economy.
Second, pursue vertical specialization. Hyperliquid is the most typical example—it's an integrated exchange that just happens to use a public chain as its execution layer. Specialized exchanges can often be profitable, but their upside is capped by their niche. They should be valued as exchanges with a deep moat, not as an open-ended economy with no ceiling.
Third, operate as an L2. Build your business on top of an L1, renting the underlying security. Some L2s will become quality businesses, but they're essentially franchises, like stores on Shopify. Even if an L2 dies, its on-chain state can be migrated elsewhere—which is precisely why they can't accumulate value the way underlying public chains do: L1s have data persistence guarantees, L2s merely rent.
The fourth category is special: BNB. The market prices it as an independent economy, but it isn't one. Because it's not decentralized—its real underlying guarantee is Binance's balance sheet. It's a good business, but fundamentally a centralized platform token dressed up as an L1.
Why most public chains can't escape extinction
The vast majority of remaining public chains—the large number of projects that launched in the past two cycles—don't fall into any of the four categories above. They're general-purpose public chains trying to compete with those independent economies without the qualifications to win; not specialized enough to occupy a dedicated niche; not centralized enough to rely on a major platform's balance sheet. They're just "a public chain." A public chain without a moat will ultimately go to zero.
This is the structural root cause. And at the operational level, what actually kills them is the token launch mechanism.
Since the summer of 2024, I've been studying low-float, high-FDV tokens, and the pattern hasn't changed: the market hates these assets. Tokens launch with a tiny circulating supply, often immediately crashing 70% or more as the market front-runs future unlock selling pressure. In a bull market, if there's real demand behind it, a low-float token can surge. But when a bear market arrives, unless unlocks are largely complete or demand is genuinely sustainable, these assets severely underperform the broader market. And for public chains without a moat, demand is never real. They only get short-term hype, and hype is very hard to convert into long-term adoption—the vast majority of it evaporates instantly.
So the launch structure merely accelerates the process of these homogenized public chains going to zero. Even without the launch mechanism problems, the market would ultimately deliver the same result.
The race toward zero cost
Most valuation frameworks in the industry fail here.
The core dimension of public chain competition is operational efficiency. That is, the public chain that wins the coordination competition will inevitably push the marginal cost per transaction toward zero. If you plug this into a discounted cash flow model, the conclusion is actually that the leading public chain is valued lower than the challenger, because it earns the least in fees per transaction. The model gives a completely inverted answer.
To evaluate a public chain's value, you need to think in reverse. Imagine if Ethereum were shut down: all L2s would be paralyzed, most of the stablecoin market would disappear, all of DeFi, NFTs, and tokenized assets would be impacted, and the possibility of the financial system building its future on this infrastructure would cease to exist. That is Ethereum's value. No one evaluates TCP/IP by counting the revenue per data packet. You evaluate it by looking at the entire internet that runs on it.
This competition will continue to accelerate, and a new class of users is about to enter. I've previously written about how AI agents can't use the traditional banking system and must rely on these on-chain rails for settlement. Agents have no inherent preferences—they automatically choose the cheapest, fastest, and most efficient network every time, and the moment a lower-fee option appears, they'll immediately leave a more expensive chain. Solana and Sui have already pushed stablecoin transfer costs to near zero—this is Wright's Law playing out before our eyes.
Some businesses need Ethereum's underlying security; some only pursue extreme speed. So different public chains serve different scenarios, and the market structure is one where the top captures the vast majority of share, rather than winner-take-all. But tail-end public chains don't even get a slice of the pie.
Everyone is looking at the wrong metrics
I can explain why the industry's measurement standards are themselves wrong—I've fallen into this trap myself.
Earlier this year, I set out to build a valuation framework for L1 public chains. Like every analyst, I started with fully diluted valuation paired with the metrics everyone tracks: total value locked (TVL), fee revenue, DEX trading volume, stablecoin market cap. The data correlations looked very high, and at the time I thought I'd found the right approach.
But that wasn't the case. The entire logic was circular. TVL is denominated in the very token being valued; DEX trading volume rises and falls with speculation; fees fluctuate with trading volume. It's equivalent to using data derived from token price to explain token price. We were observing symptoms, not the thing itself.
So I stripped out the price distortion and converted everything into ratios unaffected by token price. Taking the January 2025 peak and covering data from 12 public chains, I asked only one question: is there any metric that can predict which public chains will fall the least over the next 13 months?
Fee yield had zero predictive power. Bull market fees only reflect speculative heat, not real value creation. TVL/FDV (the crypto version of price-to-book) was equally useless.
The only metric correlated with asset returns was capital turnover: how fast capital moves through on-chain exchanges. But the correlation was inverse. In January 2025, Solana's capital turnover reached 200x its TVL, while Ethereum's was only 7x. The faster the capital turnover, the worse the chain performed over the following 13 months; chains where capital settled and stayed showed stronger downside resilience.
My current understanding is that turnover represents entropy, while capital stickiness represents order. When capital comes in and settles—used for lending, swapping, restaking—it continuously builds economic connections and attracts more capital. Capital that rushes in and out just treats the chain as a casino, leaving nothing behind when the momentum fades. So the high trading volumes everyone celebrates at bull market peaks are actually risk warnings; the chains that look unremarkable with long-term capital settlement are the ones that can withstand drawdowns.
Characteristics of survivors
From this, I've distilled three key dimensions to watch, none of which are related to price:
First, whether economic density per user holds up when the token price crashes. From the December 2024 high to February 2026, one public chain token I tracked fell 83%, TVL dropped 78%, and active addresses declined by three-quarters. But the capital deployed per active user barely changed: about $2,100 at the peak, still $2,100 at the trough. Speculative tourists and bots left, but the remaining users were still conducting economic activity of the same scale. Of the public chains I examined, only three L1s maintained this density metric through the downturn: Ethereum, Solana, and Sui. For all other chains, user economic density shrank alongside the token price; one well-funded major L1 saw its user economic density drop by 83%, meaning retained users essentially stopped all on-chain activity.
By the way: I do work at the Sui Foundation. But I only discovered Sui was one of the three after completing the data analysis—data doesn't lie.
Second, whether stablecoin balances continue to grow during the token decline. The value of on-chain USD stablecoins doesn't shrink with the token. If dollar capital keeps flowing in and settling during a bear market, it means external capital is making a long-term choice. All three of these public chains saw stablecoin balances grow during the downturn, including the one whose token fell 83%—its stablecoin scale still grew by about half.
Third, continuous developer inflow, which is also my highest-weighted metric. Developers are the scarcest capital for a public chain. Users can withdraw all their capital within minutes; developers invest years learning a specific language and architecture, making migration costs extremely high. When developers continue migrating to a particular chain during a bear market, it means the most knowledgeable people in the industry are making a high-conviction choice with very high switching costs. Price charts can never show this.
Growing wallet numbers, rising on-chain transaction value, developers entering first, and all of these metrics still holding up during drawdowns—that's what a cycle-proof asset looks like. Only if it meets these conditions is it worth deep research; if it doesn't, what you're holding is just a commoditized token.
These assets' S-curve growth may include a 90% price drawdown along the way. But the few that survive will achieve exponential gains over the long term, continuously hitting new highs. After thousands of projects go through the survival-of-the-fittest screening, network effects kick in and the entire ecosystem takes off.
There will be more and more long-tail projects, with massive token issuance every cycle. Many people fantasize about finding a 100x gem among the sea of long-tail projects, while ignoring the main opportunity right in front of them. Focus on adoption, not price.
The vast majority of projects will ultimately die. The few that survive are the core of the entire game.
