However, nearly 40% (3322) of cryptocurrencies have been deactivated and delisted from CoinGecko due to one reason or the other.
Of course, for more than a decade now, it is crystal clear that not all
One of the Biggest Failed Crypto Projects and Why It Failed:
There are so many failed crypto projects but here is one out of many;
The Terra Luna or TerraUSD crash
Evidently, the Terra Luna and TerraUSD crash sent a shockwave through the entire crypto world as the value of the global cryptocurrency plummeted by about $1tn in May 2022. Luna losing about 90% of its value within an hour really triggered a short wavelength of fear.
This means that solidly funded projects are not immune to crashes. While this cast doubt on the stability of stablecoins, it also depressed crypto enthusiasts as they watched their screens in awe as the market collapsed before their very own eyes.
What actually happened: According to
Alternatively, Terra’s stability was based on the algorithm tied to its sister coin, Luna. When Luna’s market valuation plummeted from about $80 (Its value at the beginning of May 2022) to a fraction of a cent, Terra’s value plunged immediately.
Experts’ View on Why Some Crypto Projects Fail Within a Little While:
After reaching out to some experts with deep knowledge and experience in the crypto industry, only a few responded.
Meet
Q1: Why do so many crypto projects fail in less than 2 years even when listed on CMC?
A1: Many crypto projects fail within two years despite being listed on CMC due to various factors such as poor project planning, lack of adoption, unsustainable business models, and market volatility, among others.
CMC listing alone does not guarantee the success or longevity of a project.
Q2: How can newbies spot the real gem to invest with?
A2: Not financial advice, but I personally conduct thorough research, read whitepapers, evaluate the team's credibility, monitor community engagement, and seek others’ opinions on the project.
Q3: Is there any foolproof formula to spot the right project?
A3: There is no foolproof formula for spotting the right project, just take everything as an opportunity to learn.
Q4: Why does a Crypto project with great ideas still fail?
A4: There are many reasons why a project with a great idea could fail, to name some: lack of market fit, lack of execution, strong competition, factors beyond one's control, etc.
Meet
Q1: Why do so many crypto projects fail in less than 2 years even when listed on CMC?
A1: There is no 100% guarantee, just fulfill the requirements, and that’s all. It’s a volatile market.
Q2: How can newbies spot the real gem to invest with?
A2: Carry out research on the project — their founders, meaning, applications, and track records.
Q3: Is there any foolproof formula to spot the right project?
A3: Yes, look at what the project got; and how it’s going to solve human wants.
Q4: Why does a Crypto project with great ideas still fail?
A4: Not everything is feasible. It depends on how people find the project related to their current situation. The fewer people adopt your great project idea, the more chance for it to fail.
Other Reasons Why Some Crypto Projects Fail Within a Short Time:
1: Lack of adoption because of unclear solutions to any problem
If your crypto project isn’t solving an existing problem, then it lacks commercial viability and purpose.
So many crypto projects failed because some founders came up with an idea that they feel is revolutionary; but in reality, it solves nothing. Consequently, when they venture into such a project, it fails within one to two years.
Literally, people only adopt what they perceive to be of great application to them, especially when it’s tech-based.
The natural law of demand and supply also plays a strong role in the crypto market. So, if a crypto project lacks market adaptability, then it’s prone to fail.
2: Lack of team structure and members' incompetence
Lack of solid team structure and members' incompetence is one of the major reasons why
Running any crypto project involves critical decisions that need expertise at every stage of development; hence, any project that lacks the right expertise with in-depth know-how skills will definitely fail.
Surely, there are numerous software developers in the world. However, there are a few of them that are experts in the
Therefore, hiring the best expertise here is very expensive; and as such, some project founders end up hiring developers with little or no understanding about crypto and its market.
While this decision will not only cripple the project, it’ll waste their time and resources.
3:Lack of funds to completely pull through unforecastable budget
Lack of sufficient funds to pull the project through is another major reason why good projects fail within two years. Whether you’re building a crypto project from scratch or you’re implementing it into an existing business, it is important to know that the funding is not cheap.
Many project owners and stakeholders tend to overlook the cost aspect, and that is why they fail.
Working on a decentralized ledger technology is not that seamless to implement right away. Besides the advancement of this technology and its expensive infrastructures, it’s still in its infancy, so there is no guarantee that you’re going to achieve absolute success at a go.
However, there’s room for errors and all these are unforecastable expenses that need to be funded. Therefore, if a project can’t refund the process when it fails during the development stages it ends up as failed.
4: Adopting an inappropriate blockchain platform for the project
One of the major reasons why crypto projects fail too soon is because they adopted an inappropriate
There are several blockchain platforms available in the market, and it’s an error to randomly choose without thoroughly analyzing and deciding which features and peculiarities suit your project idea.
Any project that fails to carry out thorough research on the following when choosing a platform is prone to fail:
- The consensus mechanism
- It’s sustainability
- The transaction speed and cost
- The smart contract functionality.
5: Lack of solid vision and zero understanding of the crypto project you want to venture into:
Whether you’re a newbie or a crypto enthusiast, you’ll agree with me that growing a blockchain-based startup is not a walk in the park. One of the things that determine the survival of a crypto project is the vision and depth of knowledge that powers the project.
Unfortunately, some projects fail within a short period just because they lack the vision and the understanding (technical know-how) to turn the vision into a reality.
As a founder or business owner that wants to run a crypto project that creates a blockchain-based solution, irrespective of the industry you're in, it’s pertinent to ask the following questions.
- What problem is your innovation solving?
- What’s the current market size demand for your solution?
- What should your prospective users do with your product?
- Is there a competitive solution in existence, or are you the first person creating the blockchain-based solution?
If you can’t answer these questions convincingly, it’s advisable to pause for a while until you can partner with someone or an organization that has answered the questions.
How to Spot a Real Crypto Project That Would Survive The Killer Storm
Although there is no foolproof formula to guide you on how to spot real gems to invest in, here are a few points that can guide you better on this.
1: Conduct thorough market research
It’s an error to jump into crypto projects without carrying out proper research. According to
As an investor looking forward to investing in a real crypto project that lasts, it’s imperative to thoroughly run a check on the project before investing your hard-earned money.
Stop following the hype and fear of missing out( FOMO). From research, you’ll know who certified them; you’ll discover if it’s a honey pot project that rug pulls. You’ll discover if it’s a project solving a real-world problem; you’ll discover who their founders are and many more.
All the gathered information will help you decide wisely. Once again, research, research, and research!
2: Evaluate their team members' credibility
Whether blockchain-based or not, the power of a great team has a great impact on any project. As an investor, it’s your job to evaluate the team members backing up the supposed crypto project you want to invest in.
Discover if they’re deeply experienced in their fields and if they have the right technical know-how to execute such projects credibly and so on.
Projects that are backed by team members with little or zero knowledge of what is required to sustain the project end up stalling and failing in the long run. However, projects that are backed by credible team members stand a chance of succeeding in the long run.
3: Seeking other professional opinions on the project
Since you can’t know it all, you should leverage professional opinion. Make Twitter your friend, and be cautious too. There are so many good crypto professionals out there that provide genuine feedback on projects, while there are some that do support and speak well about bad projects.
Who you follow or listen to matters here.
How do you know the good ones? Well, run background checks on their professionalism in this niche and how impactful they’ve been over the years.
Some of the professionals in the industry create quality and supportive threads on good projects with the intent of helping people looking for good projects.
Most importantly, they don’t force or pressure their followers to invest in a gem or coin. In fact, they end up advising you to do your own research.
4: Monitor community engagement
Here is another great method of determining good crypto projects. Good projects have responsive and engaging communities. In the last few years, Telegram, Discord, and so on have been the most used communities out there.
Let’s take Telegram for example; if a project Telegram community has about ten thousand members and less than 500 members are active at any time you visit the group, such a group is filled with bot members, not real members.
If you ask questions and it takes forever to get a response, run! Such a project is scammy!
Note: Real crypto communities are always busy and engaging.
5: Determine and understand the real-world application of the project
Every real crypto project should provide a unique solution to a real-world problem. And Such solutions should be applicable in the real world. So, if you find a project that satisfies this, then you’ve discovered a project with great potential.