The Romans spent about 500 years building aqueducts.
Before the construction of aqueducts, residents mainly relied on local water sources: rivers, springs, and streams. In addition, residents could also obtain water from ancient cisterns, and collect rainwater.
This meant that the entire water supply was scattered across the country, hindering the development of Rome. Demand exceeded supply, and water was necessary not only for basic sanitation but also for the industrial development of Rome, including mining, agriculture, and mills.
Therefore, over the course of five centuries (the middle and late periods of the empire), Rome built 11 aqueduct systems, including pipelines, tunnels, bridges, and canals. The aqueducts brought fresh water from sources 57 miles away from the city, supplying over 1.5 million cubic meters of water per day (750 liters per person per day).
The Romans often drilled wells in their homes. In fact, blockchain has done the same thing-attracting a large amount of cryptocurrency capital to power its network, but this capital is actually trapped in their respective ecosystems.
Fortunately, cryptocurrencies do not need to spend too long building their own pipeline systems.
Cryptocurrencies are currently busy building aqueducts. Overall chains such as Ethereum mainnet, Binance Smart Chain, and Solana have largely absorbed most of the cryptocurrency capital, both through direct staking by validators to the chain itself and by absorbing this capital through their DeFi ecosystems.
Liquidity staking protocols such as Lido, Rocket Pool, and Jito help unlock some of the locked capital by tokenizing staking receipts for trading, borrowing, or other uses in liquidity pools.
These allow cryptocurrency stakers to maintain the productivity of their digital assets after contributing to the economic security of platforms such as Ethereum and Solana. According to data from DeFiLlama, currently about $54 billion in cryptocurrencies is locked in these liquidity staking protocols, accounting for more than half of the total locked value in DeFi.
Re-staking protocols such as EigenLayer, Karak, and the emerging Symbiotic are studying how to channel productivity to protect other platforms, rather than for trading and liquidity farming, with the aim of channeling liquidity to smaller-scale financial products that also need economic support to function.
So far, $20 billion has been locked in these cryptocurrency aqueducts, with most of it locked by EigenLayer, which now has about a dozen actively validated services.
When building its own ecosystem, Karak’s market value has exceeded $1 billion, although it accepts types of collateral other than staking Ether, including wrapped Bitcoin and stablecoins.
Just as the Romans could not obtain enough water, cryptocurrency users cannot obtain enough returns. Both of these dynamics have led to explosive growth in infrastructure.
This approach worked for the Romans–until it failed. It’s best to blame this on governance.
Some important data:
Currently, the staking rate of ETH supply exceeds 27%, higher than the 24% in January.
1/3 of the staked ETH is done through liquidity staking applications such as Lido. Another 9% is staked through re-staking protocols, mainly by EigenLayer.
According to DeFiLlama data, currently $175 million in WBTC, FIL, and NEAR is invested in smaller staking platforms such as Pell, Parasail, and Octopus.
After falling 6% in the past week, BTC is trying to recover $67,000.
NOT, UNI, and TON led the rebound, with the former rising 21% in the past day, but still falling 4% in the past week.
Track (modular) funding:
We should be curious about everything. Let’s focus on something interesting in the cryptocurrency-Where does the money go and who is interested in what.
Last week, we saw modular blockchain solutions raise millions of dollars, and in the first quarter of this year, we also saw some funds flow into similar projects.
Naturally, how venture capital sees modularization in the crypto field, although it is very popular, the scale is still small.
Vance Spencer, co-founder of Framework Ventures, said that interest in modularization “has declined compared to last year.” He added, “I doubt that people’s interest will rise again unless we see more people adopt this approach.”
Ali Yahya, a general partner at a16z Crypto, wrote in January, “At the same time, the advantage of monolithic architecture is the ability to deeply integrate and optimize across modular boundaries, resulting in higher performance… at least initially.” But he praised modular technology for allowing “permissionless innovation,” allowing those who interact with it to specialize and promote organic competition.
Even though I have heard about people’s interest in SocialFi and the necessity of building infrastructure, modularization was basically not mentioned in the first quarter’s conversation about capital flow.
Vance Spencer believes that a part of the modular technology stack has received enough attention, which will reduce people’s interest in similar projects. He explained, “If I had to say, I think there is at least the possibility that venture capital’s interest in modularization will remain stable or slightly decline in the short term.”
This does not mean that there is no interest, it just means that capital is less likely to continue to flow into certain parts of the technical field, because some participants-such as Celestia and EigenLayer (even post-financing Avail)-have become more mature.
If you are familiar with these projects, then you will know that they focus on data availability, as Vance Spencer said, which is the first layer of the modular technology stack, and they have raised millions of dollars. In February, EigenLayer raised $100 million from Andreessen Horowitz.
Then, competitors Celestia and Avail raised millions of dollars. Spencer told me that it is difficult for him to imagine that new data availability projects will receive more funds without some kind of differentiation, perhaps he is right…
The remaining two parts of the entire technology stack are the settlement layer and the execution layer. Vance Spencer further stated:
“I think we may see more experiments at these levels, but I think the adjustments will be relatively small, such as different programming languages (see Movement Labs), where some types of projects will continue to receive funding, but I think we are unlikely to see projects of the same scale as those at the DA level.”
The cryptocurrency market needs a limited number of “cryptocurrency aqueducts” to be built at the same time, especially when there is not much difference between products. Modularization can stimulate competition and allow more innovation, even if venture capital funding is slowing down, modularization is still very interesting.