Is BUILD still happening? What are the weaknesses and challenges in the industry behind the proliferation of cryptographic infrastructure?

Blockworks points out that there is an overabundance of infrastructure in the cryptocurrency space, with a surge in L2 solutions but a lack of actual applications. The excessive construction of infrastructure has led to market aversion, and improvements are needed in interoperability, development balance, market promotional strategies, and user education.

Expansion of Cryptocurrency Industry Infrastructure

According to data from L2Beat, there are currently 71 L2 solutions in the cryptocurrency space, with another 82 in development, not including L3 solutions.

It is evident that despite the initial ICO craze, DeFi Summer, the surge of L2 and NFTs, the cryptocurrency industry still faces the issue of excessive infrastructure without sufficient practical applications.

Is the Essence of Cryptocurrency Still Driven by Profit?

It is widely known that the pursuit of profit has been a driving factor behind the continuous introduction of numerous new L2 solutions, particularly in terms of creating inflated valuations such as FDV.

A few months ago, cryptocurrency researcher Ignas expressed frustration with the abundance of L2 solutions and applications, emphasizing that many users, including himself, may no longer be excited by the replication of seemingly successful cases like Uniswap or Aave onto another L2:

This year, most new project tokens have adopted the consistent issuance method of "high valuation, low circulation," yet lack true innovation in application, making them ultimately useless tokens.

Ignas: Lack of true innovation in the current market, pointing out potential innovative momentum in communities, prediction markets, and gaming projects

It is clear that the "Fat Protocols Theory" proposed by Joel Monegro, co-founder of Union Square Ventures, still holds weight, as nearly 20 of the top 30 cryptocurrencies by market cap are L1 or L2 tokens.

The theory emphasizes that blockchain value will accumulate from the infrastructure layer rather than the application layer, a notion supported by the current market situation.

However, the surplus of solutions seems to have led to user fatigue and market displeasure, with the highly anticipated L2 Blast now valued at only $10 billion compared to its initially projected $27 billion FDV.

Ignas on the market status: Ethena's advantage lies in its difficulty to replicate, advises against playing Blast

The Necessity of Infrastructure

Andrew Huang, founder of Rollups construction service RaaS Conduit, expressed that he does not oppose the presence of similar L2, applications, or Rollups, and explained the economic drive behind ongoing infrastructure construction:

For many teams, developing and launching their own dedicated Rollup solution is a reasonable business decision, allowing them to directly benefit from the revenue generated by applications without having to hand over high fees to L1 or L2.

He added, "As DApps grow, they drive up network fees. Having their own Rollup can help developers reduce costs and earn more revenue."

Why Rollups should not use protocol-native tokens as fuel payment currency?

Challenges of Infrastructure

Poor Interoperability Experience

Matt Katz, CEO of RaaS service provider Caldera, believes that while infrastructure has made progress, there are still many limitations and challenges to address, including liquidity dispersion and interoperability issues with Rollups:

It is expected that tens of thousands of Rollups will emerge in the future, but they are often independent and difficult to bridge between each other.

He urged, "DApps and infrastructure need to collaborate rather than treat crypto as a zero-sum game."

Development Imbalance

Wei Dai, partner at investment firm 1kx, pointed out the imbalance in infrastructure, stating that excessive funding and resources have been allocated to certain areas, while others such as AVS tools and interoperability layers lack sufficient funding:

Interoperability issues extend beyond cross-chains and include broader design concepts like "Chain Abstraction," which eliminates the need to rely on external service providers for high-risk cross-chain transfers, thereby improving user experience.

What is Chain Abstraction? Enhancing user experience more comprehensively than Account Abstraction

The Dilemma of On-chain Applications: Promotion and Education

Josh Cornelius, partner at crypto venture Seed Club, acknowledged that while infrastructure has matured, many applications have yet to thrive, attributing this to a lack of market promotion and user education:

The biggest challenge for developers of consumer applications is getting users to understand the novel and differentiated experience brought by cryptocurrencies and blockchain.

He emphasized, "Old marketing strategies are no longer effective; developers need to find new ways to help users understand and accept these new technologies."

What we need are influential entrepreneurs who can discuss blockchain technology in easily understandable and culturally relevant stories.