Funding rates are insanely negative, and longs are getting crushed—this all feels very familiar. Take some major perpetual contracts recently: funding rates repeatedly dipped into the -0.03% to -0.08% range. With settlements every 8 hours, longs not only have to endure falling prices but also keep paying shorts. The higher the leverage, the more painful this “lose once on price, then lose again on funding” effect becomes. Once market sentiment shifts, crowded longs become fuel for a cascade of stop-losses, making the price action look especially brutal.

What’s the state of the L2 sector now? On-chain trading volume is split roughly between mainnet and a handful of leading rollups. New projects are still issuing tokens, but very few are actually generating revenue. Public data from L2Beat and elsewhere also makes it clear that the top rollups capture most of the L2 ecosystem’s TVL and trading activity. Even when smaller projects issue tokens and offer incentives, it’s hard for their daily active users and fee revenue to sustain the narrative. After the valuation selloff, many assets have fallen to prices that only reflect their ability to “stay alive”: the teams are still there, TVL is still there, and fee-sharing revenue is still there. Some protocols even generate annualized fee revenue in the millions of dollars, yet the market prices them as if they were going to zero. For example, some L2 infrastructure tokens have fallen 80%–90% from their highs, with market caps now approaching or even below a conservative estimate of “team cash + existing TVL + ongoing fee-sharing revenue.” Value investors see this kind of mispricing as an opportunity, not a risk.

My approach is simple: I don’t try to call the bottom. I buy in batches when it comes to L2 infrastructure with real revenue and real cash-flow sharing, and the uglier the price action gets, the more I buy. You never guess your way to the bottom; you get there through position sizing and discipline. After a long period of sideways trading, volatility compresses, and the market will eventually choose a direction. But before it does, be clear about whether you’re holding an asset or a story. Behind an asset are revenue, fee-sharing, a team, and TVL; behind a story is nothing but the next wave of sentiment. If you disagree, explain why.