Abstract, an Ethereum layer two project, will be ceasing operations on December 15th. The shutdown is the culmination of a months-long effort to establish itself and turn a profit that has not borne fruit; in the end, Abstract could not make the numbers work.
Abstract’s Shutdown: Causes and Consequences
Though tens of millions have been put into the network’s development and infrastructure, it has proved impossible for the project to attain the kind of traction needed to be viable in the long run. In a recent Digital Asset News episode, it was reported that over the course of a day Abstract saw fees come in at a meager $3,900, nowhere near enough to keep the lights on.
Wider Pattern: Multiple Layer Two Shutdowns
It is a case in point for the Ethereum layer two ecosystem, where projects are up against more than just technical difficulties—they must also contend with the hard task of building a sustainable user base. And Abstract is not alone in its troubles. Pungi Penguins, the NFT project, has also called time on its Ethereum layer two operation this week, the second closure in as many weeks. At the root of both is the inability to generate the revenue and adoption needed to pay the bills.
DeFi Llama notes that layer twos need to be pulling in fees or they will be expending capital and closing shop in short order. It is a matter of some concern in the Ethereum community, given how hard it is for a venture to stand out when established networks command the bulk of the transaction volume and attention.
Market Realities: Adoption Is Everything
As put on Digital Asset News, one only has to compare McDonald’s with a niche restaurant to see the disparity. Mainstream networks with their sizable following do well, but smaller endeavors like Abstract cannot find a market for themselves. These are the realities of blockchain startups: you cannot survive without fee generation and users to go with it. The fact that even a well-heeled project like Abstract has to fold is a lesson in itself for investors and developers alike, as is the example set by Pungi Penguins. Innovation means little if you do not have product-market fit and a community to show for it.
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