Arthur Hayes Predicts Demise for Most Layer 1 Blockchains: Only Ethereum and Solana to Survive, Analyst Says
Introduction: A Sobering Prognosis for the Blockchain Ecosystem
In a recent interview that has sent ripples through the cryptocurrency community, Arthur Hayes, the co-founder of the pioneering crypto derivatives exchange BitMEX, issued a stark warning about the future of layer 1 (L1) blockchain networks. Hayes boldly predicted that the vast majority of L1 blockchain tokens are destined for failure, with only two notable exceptions: Ethereum and Solana. This prognosis challenges the prevailing narrative of a multi-chain future and forces a critical re-examination of what constitutes long-term value and utility in the increasingly crowded blockchain space. Hayes's comments, made during a discussion with Altcoin Daily, cut through the market's noise, suggesting that the initial hype and price surges surrounding new L1 projects are often mirages, obscuring a fundamental lack of sustainable use cases. His analysis provides a sobering counterpoint to the exuberance that often accompanies new network launches and serves as a crucial guidepost for investors navigating the complex L1 landscape.
Arthur Hayes's Core Argument: The "Zero" Sum Game for Layer 1s
Hayes did not mince words when delivering his assessment. “I think pretty much every other L1 besides Ethereum or Solana is a zero,” he stated unequivocally. This sweeping declaration underscores his belief that the competitive moats around the two leading smart contract platforms are too wide for newcomers to cross. He expanded on this by explaining the common cycle these projects follow: an initial price pump fueled by investor FOMO (Fear Of Missing Out), followed by a gradual decline into irrelevance as they fail to capture meaningful developer activity and user adoption.
The core of his argument rests on the idea that early hype may boost new blockchains, but long-term utility remains elusive for most digital assets outside top networks. Hayes pointed out that investors are perpetually searching for "the next Ethereum," hoping to replicate the astronomical gains seen by early ETH adopters. “Every coin gets their first pump. And people want to believe in the new L1 because everybody wants to invest in the new Ethereum, like they would have in 2014 when everyone missed it, me included,” he noted. However, he was quick to caution that this initial excitement rarely, if ever, translates into lasting viability, leaving many investors holding assets that ultimately trend toward his predicted value of "zero."
Case Study: Monad and the "High FDV, Low-Flow" Model
To illustrate his point, Hayes singled out Monad, a recently launched layer 1 blockchain that has garnered significant attention and backing from prominent firms like Coinbase Ventures. Despite its credible backing, Hayes was deeply skeptical of its prospects. He labeled it a "bear chain" and forecasted a catastrophic price collapse.
“I think it’s going to be another bear chain. It’s going to go down 99% because it’s another high FDV, low-flow piece, VC L1,” he added. The term "high FDV" refers to a Fully Diluted Valuation—the theoretical market cap if all tokens were in circulation. A high FDV at launch, especially when coupled with low circulating supply ("low-flow"), often indicates that venture capitalists and early investors hold a large portion of the tokens. This can create significant sell-side pressure as these tokens unlock over time, potentially overwhelming retail demand and leading to severe price drawdowns, exactly as Hayes predicts.
At the time of his comments, data from CoinGecko showed MON trading at approximately $0.037, representing a 45% increase from its Initial Coin Offering (ICO) price of $0.0254. This initial pump aligns perfectly with the pattern Hayes described. The coin had achieved a market capitalization of around $398 million, a valuation Hayes believes is inflated relative to its fundamental utility and adoption, making a deep correction highly likely.
Ethereum: The Institutional Backbone of Web3
In Hayes's view, Ethereum's position is unassailable due to its entrenched role as the foundation for institutional adoption of web3. He argued that large financial institutions and corporations have moved past experimenting with private, permissioned blockchains, recognizing that their utility is limited without the security and network effects of a public chain.
According to Hayes, Ethereum will serve as the backbone for traditional finance (TradFi) activity entering the digital asset space. He sees Layer 2 (L2) scaling solutions such as Arbitrum and Optimism as critical components that address Ethereum's scalability and privacy needs without compromising its core security. This ecosystem approach—where Ethereum provides ultimate security and settlement while L2s handle high-throughput transactions—is what Hayes expects to drive the next major phase of adoption and subsequent price growth for the Ethereum network. Its first-mover advantage, vast developer community, and established DeFi and NFT ecosystems create a powerful feedback loop that new networks struggle to compete with.
Solana: The Resilient Number Two in Search of a New Catalyst
Solana earns its place in Hayes's exclusive duo as the clear number two public L1 blockchain. He acknowledged its strong performance and attributed its previous rally largely to meme coin activity that exploded on its network in late 2023 and early 2024. This period demonstrated Solana's capacity for handling high transaction volumes at low costs, capturing significant retail attention and developer momentum.
However, Hayes identified a key challenge for Solana moving forward: the meme-driven growth has peaked. “Meme coins have sort of died in terms of activity relative to what it was in sort of like 2023 and 2024. Solana needs a new trick,” Hayes said. “I don’t know what that new trick is. But again, it’s the number two largest L1. I think they’ll find something.”
This indicates that while Hayes is confident in Solana's ability to innovate and maintain its position, he does not see it overtaking Ethereum in terms of price performance. “Will it be enough to power price performance greater than Ethereum? I don’t think so,” he added. The path forward for Solana, therefore, hinges on discovering and capitalizing on the next major use case beyond meme coins, whether in decentralized physical infrastructure networks (DePIN), consumer applications, or another yet-to-be-defined vertical.
Hayes's "Magnificent Five" and Personal Portfolio Moves
Beyond his analysis of L1s, Hayes offered a glimpse into his personal investment strategy by naming his "magnificent five" in crypto. This list includes Bitcoin and Ethereum as foundational assets, Solana as the leading alt-L1, and two more specialized protocols: Zcash (ZEC), a privacy-focused cryptocurrency, and Ethena (ENA), a synthetic dollar protocol.
His stated portfolio movements align with this conviction. According to data tracked by Lookonchain, Hayes accumulated 873,671 ENA tokens this week after selling over $5 million worth of ENA two weeks earlier—a move that suggests active trading within his favored assets. He also added ZEC amid its recent price rally. These actions demonstrate that while he is bearish on most L1s, his strategy involves concentrated bets on what he perceives as high-potential projects across different crypto sectors, with a clear emphasis on established leaders and niche protocols with strong value propositions.
Strategic Conclusion: Navigating an Era of Blockchain Consolidation
Arthur Hayes's predictions paint a picture of an impending consolidation within the layer 1 blockchain landscape. His analysis suggests that the market is maturing beyond the phase where technological differentiation alone is sufficient for success. Network effects, institutional trust, developer mindshare, and proven utility are becoming the dominant factors determining long-term survival.
For investors and market participants, this signals a need for heightened due diligence. The allure of finding the "next big thing" must be balanced against the immense challenges of competing with Ethereum's ecosystem and Solana's established position. The cycle of high FDV launches followed by steep declines, as highlighted in the Monad example, is a risk that cannot be ignored.
The broader market insight is clear: while innovation will continue across hundreds of blockchain projects, sustainable value is likely to accrue to a very small number of networks that have successfully transitioned from promising technology to robust economic ecosystems. As the industry evolves, watching for tangible adoption metrics—such as daily active users, total value locked (TVL) in DeFi excluding incentives, and transaction volume from non-speculative use cases—will be more telling than tracking short-term price pumps. In this environment, the wisdom of focusing on quality over quantity appears more relevant than ever.
Disclaimer: This article is based on publicly available statements and data and is intended for informational purposes only. It does not constitute financial advice.