The blockchain industry is witnessing skepticism towards the proliferation of new Layer 1 (L1) chains, as recent fundraising rounds reveal concerns about the potential overvaluation and sustainability of such projects. Notable L1s have raised millions, yet questions loom regarding their long-term viability and the so-called 'L1 premium.' While some attribute this influx to greed, others argue it stems from varied visions on chain optimization among founders. The technical and social dimensions of blockchain development make consensus challenging, leading different builders to pursue their own chains. However, the L1 valuation bubble appears to be deflating, with recent private investments markedly lower than previous highs. The preference appears to be shifting from infrastructure funding back to the development of consumer applications, which have historically absorbed more capital during prior cycles. As application revenues now often surpass that of protocols, a potential correction in application funding could emerge, reflecting a more balanced ecosystem.

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