Abstract Ethereum layer 2 shutting down amid financial struggles

Ethereum layer 2 network Abstract will shut down its chain on December 15, citing stalled growth, insufficient liquidity, and a limited DeFi ecosystem. The platform, which hosted over 144 applications and secured more than 400,000 users through partnerships with Red Bull Racing and Disney, concluded that a consumer-focused crypto chain is unsustainable as a standalone model.

Users must withdraw their assets from Abstract before the shutdown date or risk losing access to their funds. Igloo, the parent company of Pudgy Penguins, suffered significant financial losses after investing in Abstract over the past 18 months. Despite raising more than $11 million in a funding round led by Founders Fund in July 2024, Igloo will now shift its focus back to Pudgy Penguins and PENGU.

Igloo CEO Luca Netz stated that the company could have created a token or pursued an initial coin offering but chose not to. He emphasized that a token only works when there is genuine demand, adding that releasing one without conviction is not beneficial for the community. The shutdown follows a similar announcement by Ethereum layer 2 Blast, which cited rising costs as the reason for its closure.