Hey there, meme coin enthusiasts and blockchain buffs! Today, we’re diving into a hot topic that’s been buzzing on X, sparked by a tweet from Solana Legend. This post has caught the attention of the crypto community, and for good reason—it sheds light on why many crypto venture funds are struggling to deliver big returns. Let’s break it down and explore what this means for the future of blockchain investments, especially with the rise of Ethereum and its Layer 2 (L2) solutions.

The Tweet That Started It All

On June 29, 2025, at 11:31 AM UTC, Solana Legend dropped a thought-provoking take: "People ask why most crypto venture funds are struggling to outperform, and then you realize 90% of venture dollars over the past 3 years went into Ethereum and the L2 complex & modular blockchain thesis." This single line has sparked a flurry of responses, and it’s easy to see why. The crypto market is a wild ride, and understanding where the money’s going can help us predict the next big thing—maybe even a meme coin with legs!

Why Are Venture Funds Struggling?

So, what’s behind this underperformance? The core idea is that venture funds have heavily bet on Ethereum and its ecosystem, particularly the L2 solutions and modular blockchain approaches. L2s are like turbochargers for Ethereum—they process transactions off the main chain to make it faster and cheaper while still leveraging Ethereum’s security. Think of it as a sidekick that takes the load off the hero. Over the past three years, a whopping 90% of venture capital has flowed into this space, leaving other promising blockchains (like Solana) with less attention.

This concentration of funds might sound like a smart move—Ethereum is the king of smart contracts, after all—but it’s created a bottleneck. With so much money chasing the same thesis, the returns get diluted. It’s like everyone rushing to buy the same meme coin right before it peaks—profits shrink when the crowd gets too big!

The Ethereum L2 and Modular Blockchain Boom

Let’s unpack what Solana Legend means by the "L2 complex & modular blockchain thesis." L2 solutions, like Arbitrum and Optimism, are scaling Ethereum by handling transactions off-chain and then settling them on the main network. Modular blockchains, on the other hand, break the traditional "all-in-one" model into specialized layers—execution, settlement, and data availability. This approach, championed by projects like Celestia, aims to solve the blockchain trilemma (scalability, security, and decentralization).

The data backs this up: the Total Value Locked (TVL) in L2s has hit $16 billion, and it’s climbing as more projects join the party. But here’s the catch—when 90% of venture dollars are funneled into this one area, it leaves little room for diversification. Other blockchains, like Solana, which boasts a growing DEX volume (as noted by Solana Sensei), might be overlooked, even with their own bullish catalysts.

What Does This Mean for Meme Coins and Web3?

For meme coin lovers, this trend is a double-edged sword. On one hand, the Ethereum L2 boom could spawn new meme tokens with lower fees and faster transactions, making them more accessible. On the other, the heavy focus on Ethereum might stifle innovation elsewhere, like on Solana, where projects like Fartcoin are showing quirky potential tied to SOL’s movements.

The Web3 space thrives on narrative, as Nonzee pointed out in a related thread about Polkadot’s struggles. Without a compelling story, even the best tech can fade. Ethereum’s dominance gives it a strong narrative, but it also risks becoming a crowded playground where standout gems get buried.

The Community’s Take

The X thread shows a mix of reactions. Some, like stomill, agree that the Ethereum focus is a factor, while others, like Too Much Coffee, humorously compare it to betting on one laser pointer—spot on for a meme coin audience! Meanwhile, Solana fans like toly are hyped about upcoming catalysts, suggesting the battle for the crypto throne is far from over.

Looking Ahead

So, what’s the takeaway? Crypto venture funds might be struggling because they’ve put too many eggs in the Ethereum L2 basket. For blockchain practitioners, this is a call to diversify—explore Solana’s ecosystem, check out modular blockchains, or even hunt for undervalued meme coins with unique narratives. At Meme Insider, we’re keeping an eye on these trends to help you stay ahead of the curve.

What do you think? Is Ethereum’s L2 dominance a blessing or a curse? Drop your thoughts in the comments, and let’s keep the conversation going!