Overview of Recent Volumes
The cryptocurrency landscape has seen a significant rise in projects over the past years, with a notable portion facing failure. According to a recent analysis carried out by AlphaQuest and Storible on over 12,000 cryptocurrency projects, it was found that approximately 72% of projects born amidst the 2020-2021 bull run have not sustained. The data further reveals that out of the 12,343 crypto projects examined, more than 8,850 have become defunct in the last year.
Common Characteristics of Failed Projects
The analysis included specific parameters to categorize projects as “dead,” such as low trading volume, liquidity, inactive social media accounts, inaccessible websites, and delisting from major platforms like CoinMarketCap. The researchers found that 65% of crypto projects had met their demise by 2023, with notable ecosystems like Terra and Cardano housing a considerable number of defunct coins.
The report highlighted, “Nearly two-thirds of crypto projects have failed, with around 93% suffering from low liquidity or trading volume. Additionally, over half had inactive social media accounts or websites, and almost half were delisted from major platforms, cementing their failures.”
The vulnerabilities of crypto projects to market dynamics and bankruptcies were evident in the study. Major platform collapses such as those of Terra and FTX resulted in a significant number of projects being unsuccessful. The impact of high-profile investors on project success was also notable, as half of the ventures backed by Three Arrows Capital and other renowned VC firms experienced failure.
Despite these challenges, the research revealed that the average lifespan of crypto projects stood at three years, with failed projects showcasing an even shorter duration of 2.21 years. Only a fraction managed to survive beyond four years, emphasizing the volatile nature of the industry.
While the failure rate remains high, the report suggests a positive outlook for the cryptocurrency sector. The continuous introduction of new projects reflects the market’s adaptability. The report concluded, “As the industry evolves, making informed investments and leveraging past lessons will be crucial. Navigating obstacles and embracing technological advancements will shape the future landscape.”
