Hello readers,

Two years ago, Celestia was one of the hottest projects in crypto. It’s “modular” vision for crypto infrastructure shifted how many thought about the web3 tech stack back in ‘22.

Every crypto native podcast was talking about it. Seemingly, every major investor was in the project. And when the token launched, it had one of the best charts in the market (10x gains in 3 months).

The “modular stack” was the next big thing. And Celestia was going to usher it in.

That was then.

Today, the Celestia network has generated just $1.3k in fees over the last 30 days. The token is down 98.6% from its all-time high. And nobody is talking about it.

Which begs the question.

Is TIA what Warren Buffett would refer to as a “Cigar Butt?”

Or is the token and project truly cooked?

We explore in this week’s edition of The Watch List.

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Let’s go.

The Product

What Problems does Celestia Solve?

Celestia is a proof-of-stake blockchain (100 validators today), purpose-built to solve the data availability verification problem, which historically has required a node to download all transactions in a block. They’ve solved this with data availability sampling, ensuring data availability (for 3rd-party audits and app access) without requiring a node to download all of the data.

Their target customer is other blockchains (L2s & appchains).

Real World Example

Imagine you’re Robinhood. You have over 20 million monthly users trading stocks and options on your platform. Meanwhile, crypto trading has become a significant portion of your business (25% of top-line revenue in Q4).

Let’s say you decide you want to integrate further into crypto infrastructure as you see a future where all assets become tokenized for trading & settlement/accounting.

Naturally, you decide the best way to capture the most value while maintaining control and flexibility is to build an L2 on Ethereum (as Robinhood announced in June of last year).

You’ll need the following components to make it all work:

Execution: processes trades, swaps, payments, and other user actions.
Consensus: ensures no one cheats and everyone follows the same rules (think of it as security).
Data Availability: makes the history of what happened (data) available for others to audit or other applications to access.
Settlement: the final accounting/scoreboard.

If you’re Robinhood, you’ll want to build your own sovereign L2, where you control the execution. However, you probably don’t want to build your own validator network for consensus/security. Maybe you use Ethereum for this.

Of course, you need to make all of your data available for others to audit/verify and for other apps to access. You can use Ethereum for this as well. But Celestia is 90% cheaper + it could allow you to integrate across other L2s and even with Solana (future) and make your data available there as well.

Maybe you choose Celestia as your DA layer?

This is the game that Celestia is playing. They made a bold bet that most L2s would opt for cheaper DA solutions they could “plug into” via Celestia. This “middleware” solution could then connect their largest customers via the Celestia Network to create a seamless UX for future builders that want to access users and data across ALL chains connected to Celestia — while making the data available for anyone to verify.

Now. Celestia did not land Robinhood as a customer — despite its DA solution being 90% cheaper than Ethereum L1.

In fact, it hasn’t landed any major L2s as customers. Which begs the question. Does Robinhood (or any other major player) really need what Celestia has to offer?

Read along as we explore that question.

Financials

Real Economic Value

Data: The DeFi Report, Blockworks Research

Last 30 days: $1.3k (!)
2025: $276k
2024: $1.1m

Takeaway

Celestia REV is currently down 98.6% from 2024 levels — the same level at which the TIA token is down.

Why?

It made very little progress on onboarding major customers during the bull market. In fact, its largest customer is Eclipse — an Ethereum L2 that leverages the Solana Virtual Machine and has $1.3m of TVL today.

But the L2s that matter have stuck with Ethereum. We think it’s due to Ethereum’s security, liquidity, and alignment with its ecosystem. These components still outweigh DA cost savings, which are dropping on Ethereum.

Furthermore, the “app chain” thesis just hasn’t landed yet. As an infrastructure provider, Celestia’s product relies on an explosion of demand amongst businesses that have already achieved product-market fit.

Fundamentals

Data: Blockworks Research

As a single-purpose Data Availability chain (serving L2s & app chains), Celestia has a current market share of 35% compared to Ethereum L1 (in terms of data used).

It had a 95% market share in early 2025.

Celestia’s Customers

Per Blockworks Research, general-purpose L2s make up for 74% of Celestia’s data availability usage today. With that said, no major Ethereum L2s use Celestia today. As noted, its top customer is Eclipse - a (seemingly) failed Ethereum L2 that leverages the Solana Virtual Machine for execution, Ethereum L1 for settlement, and Celestia for data availability. It has just $1.3m of TVL today.

When Celestia captured 95% DA market share, it was largely due to activity on Eclipse at the time. That activity (and demand for DA) has vanished.

In total, 36 unique namespaces (crypto protocols) are currently posting data to Celestia. Unfortunately, none of them has any real user activity, as far as we can see.

Staked TIA

Data: The DeFi Report, Blockworks Research

42% of TIA’s circulating supply is currently staked, down from a peak of 74% in late 2024.

In total, Celestia has 100 validators today. Among known crypto entities, Binance holds the largest stake at 3.9%. Coinbase has 2% of the TIA staked on the network.

Staking Controversy

Celestia ran into controversy last year, when it was reported that its lead investor, Polychain Capital, earned $80m from selling TIA earned on locked, vesting tokens they purchased for $20m (we think at a token price of roughly $0.20/TIA).

In response to community pushback, Celestia changed its policy regarding insider tokens that are still locked and vesting.

Polychain ultimately exited the project with the token down 90% (Celestia bought back its remaining tokens). We believe they exited at roughly an 8x gain — an important lesson for crypto investors at this stage of the cycle. The token may be down 80-90% to you.

But not to the team and VCs who received their tokens at significantly discounted levels (for taking on early-stage risk).

Transactions

Data: The DeFi Report, Blockworks Research

Celestia is currently processing roughly 67k transactions/day. For reference, Base (largest L2) is processing roughly 76m transactions/day.

Developers

Data: Electric Capital

According to Electric Capital code commits, full-time developers working on Celestia are down 22% over the last year and 16% over the last two years.

For comparison, Ethereum full-time devs are down 2% over the last year, but up 8% over the last two years. Solana is down 2% over the last year, but up 42% over the last two years.

Token Economics

Max Supply: 1.16b

Circulating Supply: 888.9m (76% circulating)

Token Allocation & Unlocks

*The red line below is roughly where unlocks stand today.

Data: Blockworks Research

Team: 17.6%. Unlocks began in October of 2024. 80% of the tokens are fully unlocked. The remaining tokens unlock on a linear schedule through October of 2026 at a rate of roughly 5 million tokens/month ($1.5m at the current TIA price of $0.31).
Investors: 35.6%. Unlocks began in October of 2024 and were fully vested in October of 2025.
Foundation: 26.8%. Unlocks began in October of 2023. 60% of the tokens are fully unlocked. The remaining tokens unlock on a linear schedule through October of 2027 at a rate of roughly 5.7m tokens/month ($1.76m at the current TIA price of $0.31).
Community: 20%. Fully unlocked.

Additional Notes

Celestia does not have a buyback mechanism today, but the protocol has proposed a “burn” mechanism similar to Ethereum’s EIP1559. This has not been integrated to date.
In addition to the roughly $2.25m/month in unlocks, Celestia pays its validators primarily through new token issuance (due to low REV). The network has an inflation rate of roughly 10% right now — something investors should keep in mind during a bear market, when demand for the token is low.

Competition

Ethereum has continued to improve its “blobspace/DA product” for L2s through the Dencun and Pectra upgrades over the last few years.

As a result, the L2s have stayed within the native stack. This can certainly change, but we can't see a reason for them to leave Ethereum at this stage.

Risks

Very little adoption. In our opinion, product market fit has not been achieved.
Demand for DA hasn't played out the way we all thought it would when “web3” went mainstream in ‘21. Based on what we see in the market, Celestia’s service does not seem needed.
For Celestia to succeed, it needs to create a network effect as the “middleware” layer of the stack. To do so, it needs to onboard the most successful L2s and app chains. This is very difficult to achieve, and we see little progress to date.

Closing Thoughts

When we set out to cover TIA, we were hoping we’d catch ETH in 2018 or SOL in 2022 vibes. Unfortunately, that is not the case.

TIA was one of the few tokens we lost $ on during the last bull market. Our thesis was that it could be viewed as a hedge on ETH for DA, and that it had some upside in Q4 of last year if BTC went to $150k (our average cost was $1.98 on 1.5% of the portfolio at the time).

We were wrong and cut the position at year's end.

While we are not bullish at this stage, we will continue to monitor the project. The team raised $100m in September of ‘24, led by Bain Capital Crypto. So they are well capitalized. We also like the leadership and the fact that they have separated from Polychain Capital (similar to FTX/Solana). The issue today is that there seems to be very little demand for what they are offering.

Of course, there are other assets on The Watch List that we are currently monitoring for inclusion in the TDR Pro portfolio.

If you’d like to gain access to the portfolio and be notified when we make changes, you can subscribe to TDR Pro (one month free) here.

Take a Report.

And Stay Curious.

Disclaimer: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.

The Product

What Problems does Celestia Solve?

Real World Example

Financials

Real Economic Value

Takeaway

Fundamentals

Data Availability Market Share

Celestia’s Customers

Staked TIA

Staking Controversy

Transactions

Developers

Token Economics

Token Allocation & Unlocks

Additional Notes

Competition

Risks

Closing Thoughts

The Watch List: Celestia

Is TIA a "Cigar Butt?" Or a "ghost chain?"

Topics Covered