Moving out of zkSync, building its own L2, and shutting down at the speed of light: what did the $70 million financing for a chain come in exchange?
By Claude, Deep Wave TechFlow
Original title: Departing from zkSync, Building a Chain and Shutting Down the Chain at the Speed of Light: A Year for an L2 Founder
Guide to Deep Wave: Sophon founder Seb, who was the former head of DeFi at zkSync, built his own chain a year ago with $70 million in financing ZK Stack. On June 25, he announced that he would shut down this chain and move to Base using OP Stack technology as a consumer-grade app.
The SOPH token fell 94% from its all-time high, with a market capitalization of less than $20 million. Meanwhile, Sophon is not an exception: in the past two months, L2 projects such as Zero Network, Syndicate Labs, Everclear, and Redstone have been shut down intensively, while the three major chains controlled about 75% of the market share. L2's knockout tournament in the crypto bear market has gone from “who has better technology” to “who has users”.
On June 25, Sophon updated the profile on the X platform. It was originally written as “zk-powered L2,” but now it's “All in on Apps.”
Behind the six words is 70 million dollars and a year. Sophon founder Sebastien (pseudonym Seb) posted a long post on X announcing the shutdown of his L2 chain and a complete switch to Base for consumer-grade applications. The first product is called Pyre, and it hasn't been launched yet.
Seb's resume added a layer of meaning to this matter.
According to The Block, he was previously the head of DeFi at Matter Labs, the development company of zkSync. In 2024, Seb came out of zkSync and built the Sophon chain using zkSync's open source ZK Stack technology. The seed round raised $10 million, and node sales raised another 60 million, led by Binance Labs.
After a year, he shut down the chain built with zkSync technology and moved to Base. Base uses OP Stack and has no technical roots with ZK.
3.4 million a year, maintain a chain that no one uses
According to The Block, Seb revealed in an interview that Sophon's annual chain maintenance costs around $3.4 million, covering the entire chain infrastructure, Rollup services, data and analytics... After shutting down the chain, the annual money-burning rate is expected to be cut by around $3 million.
Seb wrote in the announcement that the team suspended for nine months and asked himself a basic question:
Running your own chain, have you done anything worth the money? The answer is no.
According to CMC data, the current price of SOPH tokens is about $0.0047, down about 94% from the all-time high of $0.093 when it was launched in May last year, and the market value in circulation is about $18.5 million. The annual cost of maintaining the chain of $3.4 million is higher than the market value of all tokens in circulation on this chain.
What is even more embarrassing is the structural problem of supply and demand.
According to 21Shares' report at the end of last year, there are currently more than 50 L2s in operation, but Base, Arbitrum, and Optimism handle about 75% of the transaction volume. According to Dune Analytics, Base alone accounts for more than 80% of L2 transaction fee revenue. Throughout 2025, Base's on-chain revenue reached $75.4 million, accounting for 62% of total L2 revenue of $120.7 million. Coinbase has 9.3 million monthly active trading users, and this distribution portal is not available to any other L2.
The threshold for chain building is being lowered. After the Ethereum Dencun upgrade in March 2024, the L2 data release cost dropped drastically, and the technical and financial threshold for building a chain were lowered. The result is that there are more and more chains, and each chain is directed to fewer and fewer users. Seb put it bluntly in the announcement:
Every dollar spent on the chain is a dollar not spent on a product.
Three businesses were shut down on May 1, and the wave of L2 shutdowns erupted intensively
Sophon isn't the first L2 to shut down, or even the first this month.
On May 21, three projects announced the shutdown or cessation of development on the same day. According to CoinReporter, Zero Network (Gas-free L2 built by wallet company Zerion using ZK Stack technology) confirmed its closure and was in operation for only 18 months; Syndicate Labs (a16z's $20 million Rollup infrastructure company) announced the cessation of operations, saying the Rollup market had “fundamentally changed”; Everclear (formerly Connext, a cross-chain clearing agreement, last month (Handling over $500 million in transactions) also announced the shutdown of the foundation and product development.
Earlier, Redstone L2 shut down in April. The Lattice team behind Redstone has been in operation for five years, admitting in a shutdown statement that “failed to find a sustainable business model.” According to PANews, Redstone officially ceased service on May 16.
These shutdown projects have one characteristic in common: they can run technically, but they can't sustain it economically.
Zero Network's total locked in value on L2Beat is around $1.3 million, Stage 0 level. Everclear's TVL on DeFilLama has less than $7,000 left, and the last 24 hours have had zero commission revenue. Syndicate's SYND token fell another 21% within a few hours of the shutdown announcement, a cumulative drop of about 99.5% from its high in September last year.
Ryan Yoon, senior analyst at Tiger Research, told Decrypt that the Rollup infrastructure market has been integrated around a few leading L2s, and project parties are increasingly inclined to use existing infrastructure rather than build their own new chains.
Being a mid-waist L2 doesn't have a good day. According to CoinDesk data, Linea's bridge deposit fell by more than 60% from $976 million in November of last year to $367 million in May of this year. Rollup's overall TVL fell by around 36% from its peak of around $50 billion in October last year.
Close the chain, move to Base, and then
In an interview with The Block, Seb said that Sophon chose Base because Base is building an on-chain economy with 1 billion users and is leading the smart economy (x402 protocol and surrounding infrastructure), which is in line with the direction of Sophon's product roadmap.
After Sophon moves to Base, it plans to launch five products one after another. The first one is Pyre, a gamified everyday payment app, which will launch next month. SopHearn is a standalone version of the treasury product, which will also launch next month. Sophon Play is expected to launch in the third quarter, opening Pyre's gamification technology API to developers. XP.app is positioned as a payment tool for high-net-worth users and plans to launch in the third to fourth quarter. SopHai is an AI product currently under development.
The role of the SOPH token has also changed. According to Seb, the token was transformed from the chain's Gas Token to a buyback and destruction tool for product revenue. Proceeds from Pyre, XP, SopHearn, SophPlay, and SopHai will be used to buy back and destroy SOPH on the open market.
The problem is that these products aren't generating any revenue right now.
Pyre will only be launched next month, and other products are even farther away. Seb did not disclose how much of the $70 million financing was left. According to The Block, Seb said shutting down the chain could save around $3 million a year, which will be directly used for app development and distribution.
And this is probably also the epitome of most current encryption projects, looking for blood transfusions, cutting down on clothes, warming up in groups, and waiting for a turning point.
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