When it comes to putting a number on this year’s crypto swoon, the one cited most often is $2 trillion, the amount of digital-asset market value that evaporated in the downdraft. But here’s a figure that captures the breadth of the bear market: 12,100. That’s the number of crypto tokens that have effectively ceased trading this year, according to data provider Nomics — not dead technically, but like zombies, not quite alive either.
Most blockchain projects are built around bespoke digital coins, which often function as user rewards and compensate developers for their working them ink, inventive to stay involved. During last year’s price run-up, thousands of crypto startups issued new tokens to support these projects, and bullish sentiment meant ample demand for the market to absorb the vast majority of them and still drive higher prices.
That changed this year as macroeconomic conditions drove investors away from risky assets and token prices plummeted. The implosion of the Terra blockchain and the collapse of hedge fund Three Arrows Capital and crypto firms like Celsius Network sparked another sell-off. Venture capital funding cooled. More oversized tokens like bitcoin and ether saw significant declines before eventually finding support. But for many coins that support young, riskier, and sometimes sketchy endeavors, the recession was the equivalent of a knockout blow.
Nomics compiled an analysis of coin activity for Bloomberg and found that more than 12,100 tokens have become “zombies” this year, defined as tokens that have not been traded in a month. That is more than twice as many as in all previous years combined, the researcher found.
“During the 2021 bull market, there was a lot of money, attention, and liquidity for new and existing projects,” Jacob Joseph, research analyst at CryptoCompare, said in an interview. Even good profitable projects will find it challenging to keep going in the market as they lose access to capital and financing. This contrasts with the initial coin offering eruption during the previous bear market from 2018 onwards. Back then, startups issued coins, it turns out, often illegally, to raise funds. Most ICOs didn’t even have working prototypes, let alone users; when they went down, only the investors were burned, and the market was smaller: 136 tokens became zombies in 2018, while 766 coins received this designation in 2019, well below this year’s levels.
It’s hard to pin down the scope or seriousness of the projects involved this time, although according to co-founder Nick Gauthier, a good chunk are likely memes, short-term assets, or small personal projects done for fun. in comics. Many, like a project called BoomSpace, which was supposed to be working on blockchain games, no longer have a live website, just a Twitter account that hasn’t been updated for several months.
Elonmoon, a Moon exploration-related game token, has an alert on the CoinMarketCap tracker: “We have received multiple reports that some holders are unable to sell their tokens. Please be careful and do your due diligence!