From a $4 billion valuation to a dismal shutdown: The demise of the public chain Kadena and industry reflections

On October 21, 2025, the Kadena Organization (the company operating the Kadena network) announced: due to an unfavorable “market environment”, the company will immediately cease all business activities and blockchain maintenance work. The team expressed gratitude to the community on X (formerly Twitter) and reminded users: miners will still maintain network security, and the code will remain Open Source, so the chain will still exist “technically”.

However, beneath this “technical layer of existence,” there hides a decline in ecological and economic vitality. The shutdown of Kadena is not an isolated failure case, but is becoming an important signal amidst the fluctuations of cryptocurrency infrastructure.

Starting Point and Commitment: Ambition Comes with Risks

Kadena's starting point combines industry background with a grand vision. Founded by former JPMorgan engineers Stuart Popejoy and William Martino, it promised to surpass what Ethereum could not at the time when it was launched in 2018: achieving high throughput under PoW (Proof of Work) through the “Braided Chains” system; its proprietary programming language Pact emphasizes “human-readable” and formal verification, positioning itself as an infrastructure network that is “both secure and scalable.”

The mainnet was launched in 2019, and the developer ecosystem gradually unfolded. In 2021, its market value once approached 4 billion dollars.

However, no matter how grand the promise, it cannot hide one fact: if users do not come, then the vision is just a blueprint.

Economic Vitality Declines: Insufficient Users, Dual Shrinkage of Ecology and Liquidity

In the following years, Kadena's ecological development stagnated. The number of mainstream DApps in its ecosystem, such as Babena, is also extremely limited. Meanwhile, its token KDA has plummeted over 90% from its peak. Among users, liquidity, and developers, if one is missing, it is difficult to support the idea of the “chain as an ecological platform.” Multiple researchers have pointed out that Kadena has failed to shake Ethereum's dominance in the ecosystem for years, which is directly reflected in the token's performance and developer activity. Additionally, the consumption of funds and the lack of progress in the ecosystem have also become background factors before its suspension. All of this reveals a core contradiction: in the current cryptocurrency economic framework, supply continues to expand, but demand has not grown in sync — multiple chains compete for the same batch of developers, the same batch of users, and the same liquidity, resulting in a few ecosystems succeeding while the rest gradually fade away.

The Illusion of Differentiation: Technological Novelty ≠ Product-Market Fit

The collapse of Kadena also exposed an uncomfortable truth that the entire industry is unwilling to face: the novelty of technology does not equate to product-market fit (PMF). Almost every new blockchain claims to be “scalable”, “fast”, and “low gas fees”, but when most users are deeply integrated into the Ethereum or Solana ecosystems, who is willing to migrate? The success of Ethereum does not stem from being the “fastest”, but because it has become the default home for tokens, DAOs, and DeFi protocols; Solana quickly rose due to its high-frequency trading and social application scenarios. In contrast, Kadena, while doing “better” on architectural metrics, lacks a clear ecological positioning and strong user stickiness. This logic of “building the chain first, then waiting for the market” is at the core of the infrastructure bubble: each new chain pursues an “imaginary demand”, while users and liquidity continue to concentrate towards mature forces. The final result is: hundreds of networks that are “technically feasible but economically irrelevant” rely on inertia to maintain operations until they exit the stage.

Era of Specialization: Reconstruction of the Infrastructure Track

At the same time, the consolidation of the second layer networks (Layer-2) in the Ethereum ecosystem is redefining the “rules of the game” for infrastructure design. Industry views suggest that nearly all “substantially valued alternative first layer networks” were launched before the Ethereum Dencun upgrade. This upgrade significantly improved Ethereum's scalability and reduced the costs of second layer solutions. The result is that the “first layer premium” of these alternative chains has been weakened.

From the perspective of “scalability”, choosing “Ethereum as the settlement layer and building a second-layer network” is often more cost-effective than “restarting an independent first-layer network”. In terms of cost structure, the operating costs of the former may be as low as about 1% of the latter.

In this context, the market tends to favor “specialization” rather than “generalization”: successful chains are no longer positioned as “universal platforms,” but rather focus on specific verticals of the digital economy. Kadena appears vague in this regard: it lacks a clear track and has not been able to form a strong community culture or application scenarios.

Lessons from the Integration Wave: Which Chains Will Be Eliminated?

The shutdown of Kadena marks the reality of “overbuilding” at the infrastructure layer of cryptocurrency. The current market is struggling to support the situation where “hundreds of chains are competing for the same pool of liquidity and developer resources.” In the previous cycle, a large amount of venture capital was invested in layer one networks, modular chains, and roll-ups, assuming that every project could find growth space in Blockchain. However, “liquidity is not infinite,” and users always tend to choose options that are “more convenient and have a more complete ecosystem.”

In the coming years, “integration” may replace “expansion”:

• Some networks will achieve merging or interoperability through “shared sorters” or “modular frameworks”;
• Some will fade away in silence, leaving only traces in repositories like GitHub; a chain that can truly survive independently must possess the following characteristics:

1. Able to attract real users and form sustained demand;
2. Stable trading volume / economic activity;
3. Can prove the value of its block space and form an intrinsic value cycle. In other words, the market's focus is shifting from “technical indicators” to “network gravity”. This logic is similar to the early internet era: back then, dozens of protocols competed for dominance, but ultimately only a few, like HTTP and DNS, became universal standards, while the rest quietly exited. The cryptocurrency industry is entering its own “elimination phase”.

Advice for Developers and Investors: From Broad Netcasting to Precision Betting

For developers, this means: in the future, there will be a reduction in “vanity chains with beautiful metrics but no ecological support,” while more “composable infrastructure” will be built on verified ecosystems. For investors, this serves as a reminder that combines warning and opportunity: positioning in first-layer networks is no longer a “broad bet on innovation,” but should be a selective bet on “network gravity”—the core lies in the ability to “attract and retain capital,” rather than relying solely on “performance” or “technical parameters.” In other words, ask yourself three questions: Does this chain have real users? Is it doing something that distinguishes it from other chains? Can its economic cycle sustain itself without external subsidies? If the answer to all is no, then even if the technology is advanced, it may just be “the next Kadena.”

Kadena Shutdown Supplementary Details

According to the latest media reports: Kadena has decided to cease operations due to “cash burning” and “funding exhaustion,” with its token KDA experiencing a significant drop on the day the announcement was made. The report also pointed out that the project went through multiple rounds of losses, lacked ecological advancement, and faced a tight funding chain before suspending operations, which is the result of a dual blow from the market environment and internal development. Although the chain is still maintained by miners, from an economic activity perspective, it is nearly at a standstill.

Conclusion: The Triangle of Vision, Market, and Time

The shutdown of Kadena is a painful lesson about “vision, market, and timing”: technology may be astonishing, but only when real users and economic cycles arrive can the vision bear fruit.

The market is currently moving towards specialization and integration - the time and patience given to new chains is shorter than at any previous time. Who can survive in this transformation? The answer is no longer “the strongest performance”, but “the strongest ecosystem”.