Nearly two-thirds of crypto projects to launch in the past several years have met their demise, according to a recent analysis of over 12,000 cryptocurrency projects.
The report, conducted by AlphaQuest and Storible, found that 72% of projects born during the 2020-2021 bull run have failed.
Furthermore, among 12,343 crypto projects investigated, over 8,850 have become defunct in the past year.
The year 2023 proved to be the toughest within the 2020-2023 cycle, with nearly 60% of dead coins disappearing during this period.
In total, the study revealed that 65% of crypto projects had met their demise by 2023.
The research also identified that The Terra and Cardano ecosystems have the highest number of defunct coins.
The researchers employed specific criteria to determine the “dead” projects, including low trading volume, low liquidity, inactive or deleted Twitter accounts, websites being down, and delisting from CoinMarketCap.
Common Characteristics of Dead Coins
The report said that analysis of the “dead coins” uncovered some common characteristics among the failed projects.
The vast majority, 93%, suffered from low liquidity or trading volume, indicating a decline in investor interest.
Additionally, more than half (58%) of these unsuccessful coins had inactive or deleted Twitter accounts or websites, indicating a lack of continuous social engagement or operational presence.
Furthermore, almost half (48%) were delisted from major tracking platforms such as CoinMarketCap, solidifying their failures.
The susceptibility of crypto projects to market fluctuations and bankruptcies was also evident in the research findings.
The collapse of major platforms like Terra and FTX resulted in a high percentage of projects failing.
After the Terra crash, 35% of crypto projects were deemed defunct, while the downfall of FTX led to the closure of 32% of projects.
The study also highlighted the impact of high-profile backers on project success.
Half of the projects backed by Three Arrows Capital, as well as other prominent venture capital firms, experienced failure, emphasizing the unpredictable nature of the crypto landscape.
Average Lifespan of Dead Crypto Projects
The report found that the average lifespan of crypto projects was three years, indicating the challenges they face in navigating market cycles.
The research showed that dead projects had an even shorter lifespan of just 2.21 years, with a significant number lasting less than a year or six months.
Only 22.40% of crypto projects successfully survived more than four years.
Despite the high rate of failure, the cryptocurrency industry still holds promise for the future.
The continuous emergence of new projects and narratives demonstrates the market’s adaptability and resilience, per the report.
“Moving forward, the key lies in making wise investments and learning from past experiences. As the industry continues to evolve, it will be crucial to navigate challenges and embrace technological advancements,” the report wrote.
“The undeniable significance of cryptocurrency in shaping the future of finance urges investors to approach it with a discerning eye, recognizing its potential for transformation while emphasizing the importance of risk management.”
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