More than 100 crypto projects have either shuttered, filed for bankruptcy or gone dark for good so far this year, CoinDesk reported Sunday (Aug. 9), citing numbers from RootData.
The pace is quickening, the report added, with four major companies announcing closures or filings in the space of a week late last month: BitMEX, BitMart, Movement Labs and Storj Labs. The trend covers every part of the industry, CoinDesk added, from exchanges to wallets to NFT markets to layer-1 blockchains.
According to CoinDesk, this is happening as ethereum’s layer-2 ecosystem has been shrinking after a surge three years ago, when new technological advances made it easier for companies to start their own chains. That also meant the number of general-purpose layer-2s mushroomed.
“There were way too many general-purpose layer twos, which frankly don’t make sense as a product, because there’s no reason to have many, many versions of the same thing,” Ben Fisch, CEO of Espresso Systems, told CoinDesk. “We’re in a consolidation phase for general-purpose layer twos, not layer twos broadly.”
Industry leaders contend the trend is a sign of an crypto-wide shift, not an issue that is unique to ethereum scaling networks.
“Consolidation is happening across all of crypto right now, not just layer two, from DeFi protocols to DEXs and infrastructure providers. It’s a sign that the industry is maturing. The networks continuing through this period are the ones people actually use and depend on,” Marek Olszewski, co-founder of the Celo layer-2, said in an interview with CoinDesk.
“For every crypto project that you hear about shutting down, there are perhaps another 10 silently doing the same,” Nick Puckrin, founder of Coin Bureau, wrote in a post on X. “Creative destruction for the next cycle perhaps.”
Research from the PYMNTS Intelligence report “Waiting for Certainty: Why Most CFOs Are Holding Back on Crypto and Stablecoins” found that most middle market companies are cautious about digital assets, with 13% of businesses using stablecoins and just 5% saying they use other cryptocurrencies.
However, the report added, blockchain technology could ultimately become useful infrastructure behind the scenes without consumers ever directly interacting with crypto assets.
“Accepting a crypto payment is not super simple,” WalletConnect CEO Jess Houlgrave told PYMNTS in an interview earlier this year. “You’ve got to have the connectivity, the user experience, the wallet infrastructure, the settlement infrastructure, the conversion and liquidity infrastructure. There’s a lot of pieces there.”
