Analysts named the number of “Dead” Cryptocurrencies

Earning Feb 18, 2024 0 270 Add to Reading List

For crypto projects, 2023 was the hardest year in the last four-year cycle - during this period, developers abandoned 59.35% of the tokens tracked on CoinMarketCap. This is evidenced by research from AlphaQuest .

Percentage of “dead” coins from 2020 to 2023. Data: AlphaQuest.

High mortality rate

Analysts studied more than 12,000 projects, identifying “dead” ones according to four criteria:

low liquidity/trading volume - 92.6% ;
broken website - 50.9%;
excluded from the CoinMarketCap list - 47.6%;
deleted X account - 35.6% (no updates in X for more than three months - 26.9%).

Experts also pointed to cases of fraud where attackers bought or gained access to abandoned project accounts to promote a scam.

“By analyzing social media activity, investors can stay informed and cautious in the world of cryptocurrencies,” AlphaQuest recalled.

Market filtering

72% of crypto projects (3,473 out of 4,834) that appeared during the 2020-2021 bull cycle also failed, analysts note.

Researchers have pointed to significant negative consequences of large bankruptcies. After the collapse of the Terra ecosystem, more than 35% of coins ceased to exist. The collapse of the FTX exchange took with it another 32% of tokens.

“These statistics highlight the sensitivity of crypto projects to market fluctuations and highlight the importance of risk management in this volatile area,” the researchers added.

The average lifespan of startups in the digital asset industry is three years, AlphaQuest calculated. This means that a typical project is "unlikely to survive a four-year market cycle."

Lifespan of crypto projects. Data: AlphaQuest.

According to analysts, only 22.4% of crypto projects exist longer than the designated period. Dead coins live on average only 2.21 years.

Victims

AlphaQuest has identified several categories of the crypto industry in which more than 50% of projects have ceased to exist:

video and music - 75%;
asset-backed stablecoins - 75%;
metaverses - 51%.

The most affected ecosystems were Cardano and Terra - 74% of the project was “dead” for each. Celo, Harmony, Near, Zilliqa and Moonriver also suffered significant losses.

In addition, half of the startups backed by the failed hedge fund Three Arrows Capital failed. Other VC firms that have seen more than 50% of their crypto portfolio exit: Paradigm, DWF Labs, Polychain Capital, Andreessen Horowitz, Animoca Brands, Binance Labs, and Multicoin Capital.

Previously, CoinGecko experts calculated that since the advent of the GameFi segment , about 2,127 out of 2,817 projects in this direction have failed.