Four years after the 2021 fever: what fate awaits the financially backed giants of the crypto boom?

2021 will remain in history as the year of speculative excess in the cryptocurrency sector. Bitcoin surpassed the $60,000 mark, Ethereum reached new all-time highs, and the world firmly believed that NFT avatars worth millions of dollars and the concept of the metaverse signaled the dawn of a digital revolution. Venture capital funds rushed into the sector in search of the next project capable of multiplying investments by 100 times. In that feverish atmosphere, simply labeling an initiative as “Web3” was enough to attract tens of millions in funding. The numbers spoke for themselves: crypto startups accumulated $25.2 billion in venture capital, a staggering 713% increase compared to $3.1 billion in 2020.

The financial disaster: when giants fall

Yet, looking back over the past four years and analyzing the projects with the most substantial funding, the picture is bleak. Of the top 400 funded in 2021, very few remain standing. Most have ceased operations, pivoted, suffered irreversible hacks, or slipped into inactivity. A study examining 67 emblematic cases among these failed or nearly inactive projects reveals a collapse of over $5 billion in actual value.

The centralized financial platform sector experienced the greatest trauma. A trading platform that had attracted $1.32 billion in funding and positioned itself as the main rival in the market collapsed in November 2022, dragging its founder to a 25-year prison sentence for fraud. At the same time, a crypto lending platform promised annual yields of 18% on deposits: it had raised $750 million, but its token plummeted from $8 to $0.02, erasing 99.73% of its value. Other lending and custody platforms, despite securing over $500 million combined, dissolved like a row of dominoes during the liquidity crisis of 2022.

The shipwreck of illusions: NFTs and the metaverse

While the collapse of platforms was predictable given the intrinsic fragility of their business models, the collective death of NFT and metaverse projects resembles more the deflation of a bubble of collective hope.

A Play-to-Earn game raised $159.5 million. Its token hit $164.9, and digital pets within the game traded for hundreds of thousands of dollars. In less developed economies, thousands of people abandoned their jobs to dedicate themselves full-time to “gold farming.” But when the underlying economic model collapsed, the token plunged by 99.49%, and those players realized they had invested their savings in a scheme that required an unstoppable flow of new participants to sustain itself.

A flagship metaverse project attracted $93 million, with its virtual NFT lands sold out in 2021 and the token rising to $8.4. Three years later, this so-called metaverse has become desolate, comment sections on official platforms are empty, and events attract few occasional participants. Similarly, platforms dedicated to trading digital art and music have been transformed into dormant projects.

The cruel lessons and the cycle that begins again

Projecting the dynamics of 2021 onto today, unavoidable truths emerge: the vast majority of projects are the product of speculative cycles, only a small fraction—less than 5%—create lasting value, and these are clearly evident in the most hostile markets. The wheel keeps turning. As 2025 comes to an end, a new cycle is about to begin. When the next wave of speculation recedes, how many of today’s projects will reveal their true solidity, and how many will prove to be what they really are?