Remember when the entire crypto conversation around new Layer 1s boiled down to one simple question: “How many thousands of TPS can it do?” Those were simpler times.
Fast-forward to late 2025 and literally dozens of chains can push four-figure transaction speeds while costing pennies. The bar that once separated winners from losers has become table stakes. And that reality is quietly forcing every serious Layer 1 team to confront an uncomfortable truth.
Speed was never the endgame. It was just the entry ticket.
The Real War Has Already Started
Mitchell Demeter took over as CEO of Sonic Labs barely two months ago, but he’s already speaking the kind of blunt language the industry desperately needs right now. In a recent conversation, he laid it out plain: blockspace has been commoditized. The new battlefield isn’t performance anymore — it’s retention.
Users, developers, liquidity… everything moves at the speed of a few clicks these days. If your chain doesn’t give them a compelling reason to stay once the airdrop farming ends or the hype cycle cools, they’re gone. And taking their TVL with them.
Why “Fast and Cheap” Stopped Being Enough
Let’s be honest — most of us have lived through the cycle multiple times. A new L1 launches with eye-watering benchmark numbers, TVL floods in for six to eighteen months, then reality sets in. The same DeFi protocols that migrated over for lower fees suddenly realize they can get 90% of the same experience somewhere else for even less.
The migration cost has collapsed. Forking a DEX or lending protocol and redeploying it on the next shiny chain now takes days, not months. That’s amazing for innovation, but brutal for anyone trying to build a moat the old-fashioned way.
“Builders, users, and capital move very easily today. Being fast and being cheap is no longer enough. There has to be a reason for them to stay on your chain.”
– Mitchell Demeter, Sonic Labs CEO
Building Actual Stickiness at the Protocol Level
This is where things get interesting. Instead of chasing another 2x speed improvement that nobody will notice in practice, teams like Sonic are going back to the drawing board and asking: what can we change in the actual protocol that makes leaving painful or porting code expensive?
One example Demeter highlighted is EIP-7903 — raising the contract size limit. Right now EVM-compatible chains cap verified contracts at roughly 49KB. Bump that ceiling and suddenly developers can ship more sophisticated logic in a single deployment. More importantly, once they’ve built around the larger limit, migrating elsewhere means rewriting and re-auditing huge chunks of code. That’s friction. That’s a moat.
It’s not sexy marketing. It’s the kind of quiet, nerdy upgrade that actually matters twelve months from now when the hype dies down.
- Higher contract size limits → more complex dApps in one deploy
- Custom precompiles → unique opcodes no other chain has
- Native account abstraction done right → smoother UX nobody wants to give up
- Chain-specific oracles or data feeds → another integration tax for competitors
These aren’t hypothetical ideas either. Smaller, more agile chains can ship this stuff in months while Ethereum debates for years. That speed of iteration might actually become the biggest advantage the non-Ethereum L1s have left.
Tokenomics: From Speculative Bet to Real Business
Perhaps the most uncomfortable part of the conversation — and the part most token holders need to hear — is about fees and value accrual.
For years the dominant model was “give 90% of fees to apps so they can subsidize users and hide the blockchain entirely.” It created beautiful UX. Venmo-style apps, no seed phrases, gas paid behind the scenes. Fantastic onboarding experience.
There was just one problem: token holders got nothing. Zero scarcity. If that model actually succeeded at scale, the token would be worth exactly zero in the long run.
“If the whole world moved on-chain under the current model, nothing would leave circulating supply. No scarcity is created.”
Demeter compares it to early Tesla — for years they diluted shareholders to fund growth. Once product-market fit was undeniable, they switched to buybacks. Crypto is finally reaching the same inflection point.
Sonic’s fix? Move to a sliding-scale fee structure where a meaningful portion gets burned, validators still earn enough to secure the network, and apps keep enough to continue subsidizing UX. Usage becomes directly deflationary for the token. Simple, but surprisingly rare in practice.
They’re also exploring the “real business” angle — licensing their tech stack to institutions, enterprises, even governments who want private or consortium chains. That off-chain revenue can fund aggressive buybacks and burns. Again, thinking like an actual company instead of a science project.
The Broader Industry Reckoning
Look around and you’ll see the same shift happening everywhere, even if not everyone admits it yet.
Solana’s Firedancer client, Avalanche subnets, Near’s chain signatures, Sui’s object model — every surviving L1 is trying to build something uniquely sticky. The ones still screaming about TPS in 2025 are increasingly sounding like BlackBerry defending keyboard phones in 2010.
The market has changed too. Retail is exhausted after multiple cycles. Institutional players and serious builders want to see revenue, retention metrics, and sustainable unit economics — not just TVL fueled by mercenary yield farmers.
We’re leaving the “narrative era” and entering the “fundamentals era.” And that transition is going to be brutal for projects that never planned past the first bull run.
What This Means for Investors and Builders
If you’re evaluating Layer 1 tokens today, the checklist has completely changed:
- Does on-chain activity create token scarcity?
- Are there protocol-level features that raise switching costs?
- Is the team thinking like a business or like academics?
- Can the chain move faster than Ethereum on meaningful upgrades?
- Is there a realistic path to real revenue beyond inflation?
Speed still matters, of course. But it’s now just one item on a much longer list. And it’s no longer anywhere near the top.
The chains that figure this out first — the ones building real moats instead of renting TVL — are the ones that will still be relevant when the next bull market arrives. Everyone else risks becoming another high-TPS ghost chain.
In many ways, crypto is finally growing up. And growing up means admitting that being the fastest kid on the block only matters until everyone else catches up.
The next phase won’t be about who got there first. It’ll be about who built something worth staying for.
