The researchers utilized a comprehensive set of criteria to evaluate the viability of these projects. They took into account factors such as daily trading volume below $1,000 and liquidity below $50,000 (92.6% of failed projects), deletion of Twitter/X accounts (35.6%), inactivity on social media for more than three months (26.9%), broken websites (50.9%), and removal from CoinMarketCap service (47.6%). To determine the “lifespan” of these tokens, the analysts compared the date of domain registration with the dates of the last posts on Twitter.
Interestingly, the study highlights that a staggering 72% of startups that emerged during the bullish rally in 2020-2021 had met an untimely end. Out of 4,834 crypto projects, a disappointing 3,473 failed to survive. 32% of these failures were attributed to the FTX exchange fiasco, while 35% succumbed after the collapse of the Terra ecosystem. This emphasizes the vulnerability of such ventures to market fluctuations and underscores the criticality of robust risk management, as highlighted by the report’s authors.
The video and music sector, along with stablecoins, bore the highest “mortality rate” among crypto projects. The bearish trend in the digital asset market resulted in an equal percentage of stablecoins facing collapse. Furthermore, over half (51%) of the deceased projects hailed from the metaverse industry. The study also revealed that the average lifespan of crypto projects is approximately three years, with 21.77% failing to make it past the one-year mark, and 11.65% disintegrating within the first six months. Only a mere 22.4% of projects managed to endure beyond four years.
Interestingly, Charles Hoskinson, the founder of Cardano, had previously admonished the Ethereum Classic network, branding it as “a dead and useless blockchain that does not realize its full potential.”