Three blockchain infrastructure projects shut down on the same day as Layer 2 consolidation accelerates

Three blockchain infrastructure projects closed their operations on May 21, suggesting rising concern about the sustainability of venture-backed solutions.

Syndicate Labs, Everclear (formerly Connext), and ZERO Network each shut down within hours of each other. The shutdowns involve three separate industries that have had substantial venture investments within the period from 2021 to 2022.

Syndicate Labs closes after rollup demand dries up

Syndicate Labs constructed infrastructure for Ethereum appchains and smart sequencing. The company secured $20 million in Series A fundraising, backed by Andreessen Horowitz, in 2021. Five years went into creating developer tools tailored toward rollups.

“Unfortunately, the rollup market has shrunk dramatically,” Syndicate Labs announced on X on May 21. “For every new rollup spinning up, more are quietly shutting down.”

Will Papper, co-founder of the company, said the team thought about pivoting into rollup-as-a-service consulting, but found that the market was moving away from this and towards custom execution environments made specifically for certain applications.

“I wish we had a better path to customer and market traction. Unfortunately, we did not in this rollup market,” Papper said.

EVM rollups are no longer the default route for scaling, according to the firm. Teams are choosing to construct their own chains rather than use shared infrastructure.

The Syndicate Network Collective remains independent from Syndicate Labs. “SYND governance is not immediately affected,” the company wrote.

The shutdown is unrelated to the April bridge exploit, in which attackers stole roughly 18.5 million SYND tokens and about $50,000 in user assets. Syndicate said affected holders received full reimbursement from treasury reserves.

Everclear ran out of revenue, ZERO Network ran out of users

Everclear made an announcement that they will cease operations of their foundation and development departments on May 21.

Established in 2017 by Arjun Bhuptani and initially sponsored by Ethereum Foundation, the cross-chain settlement protocol had already handled over $1.5 billion across 23 networks and was clearing more than $500 million every month.

None of this led to any sustainable source of income. The CLEAR token plummeted by 48% in just a few hours after the announcement to stand at $0.0002332. It is now confirmed that the protocol has been sunsetted and there are no funds locked up.

ZERO Network, a gasless Ethereum L2 built by wallet company Zerion using ZK Stack technology, confirmed it is also winding down. Users have until July 31 to withdraw their funds.

Zerion, which has raised $22.5 million in total funding, said it will refocus on its wallet and API products.

The network had already stopped producing blocks for three weeks in January before a brief relaunch, suggesting the operational challenges were not new.

Rollup TVL dropped 36% from October

The closures happened amid a broader contraction in the Layer 2 ecosystem. Rollup TVL has fallen about 36% from the October 2025 peak above $50 billion, per L2Beat data.

Arbitrum One, Base, and OP Mainnet now control roughly three-quarters of rollup activity. Smaller networks have been described by analysts as “zombie chains” due to minimal transaction volume.

As Cryptopolitan predicted in December 2025, the L2 ecosystem was expected to consolidate around a few dominant players, with Base, Arbitrum, and Optimism absorbing most activity. That prediction is now playing out through closures rather than gradual decline.

Lattice, Balancer, Tally, and four others also shut down

The shutdown trend extends well beyond May 21. Lattice, the blockchain gaming infrastructure team behind the Redstone Layer 2 network, announced a phased shutdown in April.

Redstone ceased service on May 16, per PANews. Lattice said it “failed to achieve a sustainable business model” after five years.

Before that, Solana DeFi aggregator Step Finance, derivatives protocol Polynomial, Balancer Labs (following a major hack), and Base-based lending protocol Seamless Protocol all closed.

Tally, a DAO governance platform used by over 500 protocols including Uniswap and Arbitrum, wound down in March citing unsustainable costs.

The common thread is shrinking room for mid-tier infrastructure. Even well-funded teams with working products cannot build sustainable revenue as on-chain activity consolidates into a few dominant platforms. Syndicate stated it could not afford to “wait out these market conditions.”

For users on the affected networks, the consequences are immediate. Everclear token holders took heavy losses on the day.

ZERO Network set a hard deadline for asset withdrawal. The market is moving from fragmented scaling solutions toward a handful of ecosystems. The projects caught in between are closing.

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