Polygon to shut zkEVM network on July 1 as L2 shakeout deepens

Polygon Labs will shut down its zkEVM Mainnet Beta on July 1, ending operations for its flagship Ethereum scaling network.

Polygon Labs said it will shut down the sequencer for its zkEVM Mainnet Beta on July 1, ending operations for its flagship Ethereum scaling network after a strategic pivot.

"The central question is no longer whether a protocol can attract users or generate activity, but whether it occupies a position within the value chain that allows it to consistently capture a meaningful share of the economic value it helps create," Roshan Dharia, CEO of distressed investment firm Echo Base, said in the context of a wave of crypto project closures.

The shutdown follows a similar move by Satori Finance, a Coinbase-backed decentralized exchange that announced it would wind down operations by July 16 after processing $134 billion in cumulative perpetual futures volume. Satori's total value locked had fallen to $1.2 million from a 2024 peak of $6.7 million, according to DefiLlama, while annualized fees of roughly $3 million proved insufficient to sustain multi-chain operations. Bitcoin scaling project Botanix also disclosed plans to discontinue its network earlier this month.

The closures signal a tightening environment for Layer 2 and DeFi protocols that raised capital during the 2021-2022 cycle but failed to achieve sustainable revenue. Polygon's decision to shutter its zkEVM chain — once the company's marquee product in the race to scale Ethereum — represents the most significant retrenchment yet, and may accelerate migration of developers and liquidity to competing networks such as Arbitrum, Optimism and zkSync.

Polygon Labs had positioned zkEVM as a zero-knowledge proof-based alternative to its Proof-of-Stake sidechain, Polygon PoS, which remains operational. The company has not disclosed whether users will be able to migrate assets or smart contracts from the zkEVM chain before the July 1 deadline.

The shutdown adds to a growing list of crypto infrastructure projects that have closed this year despite meaningful venture backing and historical usage. Satori raised $10 million in a seed round led by Polychain Capital with participation from Coinbase Ventures and Jump Crypto. Botanix concluded that demand had not reached levels needed to support long-term operations.

For Polygon, the zkEVM closure represents a strategic retreat from the zero-knowledge rollup roadmap that once defined its competitive positioning against other Ethereum L2s. The company's POL token may face additional pressure as the network consolidates around its remaining products.

This article is for informational purposes only and does not constitute investment advice.