Ethereum has undergone a major transformation in the last four years, starting as a network capable of handling only 15 transactions per year. Second, and develops into a power center that treats thousands, with transaction costs drops from $ 50 per year. Swap to bare cent. L2S and Rollups have helped scale Ethereum without compromising its decentralized ethos. But this success has led to a new problem, one of the fragmentation.

Today, Ethereum is one of the most adopted blockchains, which consists of a network of over 50 L2s, each operating as its own siled ecosystem. What this means for end users is having to juggle with multiple networks, bridge assets and navigate a maze of processes just to perform basic actions.

Mirroring the fragmented technological landscape, Ethereum’s financing landscape has become difficult to navigate for builders throughout the life cycle, which stops innovation when projects are struggling to ensure sustainable financing.

To create a more effective ecosystem, Ethereum needs to start adopting blockchain-based financing mechanisms that are better in line with its complex, socially based and experimental nature.

Traditional financing programs often focus on projects at an early stage and neglect the long -term needs of builders in web3. It may be misleading to look at the Crypto Market narratives that dominate the investment landscape and assume a thriving activity. Economic returns for many of these projects may not come in the short term, leaving builders who are struggling to navigate to sustainable growth. Financing mechanisms must be able to support builders throughout the journey in the product’s life cycle.

Rewarding influence, not speculation

One of the most promising blockchain-driven financing models is Retropgf, which flips the traditional financing script by rewarding projects based on their proven influence rather than their speculative potential. This model is especially suitable for Ethereum’s fragmented ecosystem, where public goods such as open source software, developer tools and interoperability solutions often struggle to attract advance investments.

Retropgf focuses on measurable results of a project. It collects funds from DAOS or ecosystem contributors and distributes them retroactively to projects that have shown value. This process ensures that critical infrastructure — as cross-chain bridges or developer framework receives the support it needs at the right time.

This financing mechanism is preferred because it helps customize incentives. Instead of competing for speculative investments, projects can focus on delivering real value, knowing that their contributions will be recognized and rewarded. For a fragmented ecosystem like Ethereum, Retropgf offers a way of uniting financing efforts and ensuring that resources flow to the most effective initiatives.

Amplifying community support

Another powerful tool in Blockchain Funding Toolkit is square financing, a model that distributes capital based on the breadth of social support rather than the size of individual contributions. This approach levels the rules of the game for smaller projects and grassroots initiatives that often struggle to compete with well -funded competitors in traditional financing models.

Square funding works by matching small donations from a large number of supporters with a larger pool of funds that reflect society’s collective intelligence and ensures that projects with widespread grassroots support receive most of the funding.

By tokenizing the value of public goods projects, such as management rights or revenue streams, founders can open their projects to a wider pool of supporters using fractional investment mechanisms. This creates a diverse and passionate investor base that democratizes access to capital and reduces dependence on traditional sources of financing.

E.g. Can developers who build a cross-cutting chain inter operability solution to tokenize their project management rights, allowing followers to contribute with micro-investment in exchange for a share in its success. This not only gives the project much needed funding, but also promotes a sense of ownership and adaptation among its supporters.

In a fragmented ecosystem like Ethereum, fractional investment can help bridge the chains by incentive cooperation and shared ownership. Projects that can otherwise work in isolation can utilize a unified pool of capital, creating a more interconnected and elastic ecosystem.

On-chain ownership

In the heart of these blockchain-driven financing models is the concept of ownership of the chain. By tokenizing their work and utilizing blockchain’s transparency, creators and builders can establish directly relations with their supporters, remove intermediaries and ensure that the value flows back to those who believed in them from the start.

On-chain transactions also make financing flows visible and auditory, reducing fraud and creating confidence. This transparency is especially important in a fragmented ecosystem such as Ethereum, where users and developers often struggle to navigate complex and opaque financing structures.

An important question to be addressed is how to get funding for these X-L2 initiatives.

A strategy is to make financing of Ethereum common goods a condition of being a phase 1 or phase 2 rollup. These rollups, once they have reached this level of decentralization, depend on a distributed society and tools for governance. Financing these ordinary goods and tools is not only justified but necessary for their continued growth.

An alternative would be to redirect the Ethereum Foundation Grants program to solve this problem. The EC needs to better support the L2 experience and financing of common goods to solve these challenges is the key to doing so.

Ethereum’s fragmentation goes beyond technical challenges, it is a financing challenge above all others. By adopting blockchain-driven financing models such as Retropgf, square financing and fractional investment, the ecosystem offers a way of adapting incentives, strengthening society’s support and democratizing access to capital, ensuring that resources flow to the projects that need them the most.