Coin Edition reported last week on a list of 82 crypto projects that had shut down this year. The list includes projects in decentralized finance (DeFi), gaming, wallets, and blockchain infrastructure, such as Blast, Loopring, Polygon zkEVM, Radiant Capital, and Step Finance.
He argued that 99% of crypto projects may eventually shut down, regardless of their claimed usefulness.
So, why are so many crypto projects struggling to survive? Here are five key reasons.
A major reason crypto projects fail is their inability to attract and retain users. A project may attract attention and a large community without offering something people truly need.
In DeFi, a large amount of money deposited into a protocol does not necessarily mean the business is profitable. Blast is an example. The Ethereum layer-2 network attracted more than $2 billion in deposits but later announced plans to shut down after failing to find a sustainable business model.
Deposits alone do not generate enough revenue to cover operating costs. Crypto projects need users to continue using their products even when token rewards disappear and market conditions worsen.
Many crypto projects also shut down because they spend more money than they earn.
Some rely heavily on rising token prices, investor funding, or rewards to attract users. These strategies work during a bull market but become difficult to maintain when prices fall, and new funding becomes harder to secure.
Satori Finance, a project backed by Coinbase, reportedly shut down after determining that it could not generate enough revenue to continue operating. Its closure shows that even projects with well-known investors can fail.
Security problems are another major reason crypto projects fail. DeFi protocols often hold large amounts of users’ money in smart contracts. When hackers exploit a vulnerability, a project loses funds, damages its reputation, and struggles to recover.
Radiant Capital announced its shutdown after failing to recover from a 2024 exploit. Step Finance also closed following a treasury breach in early 2026.
These cases show that the consequences of a hack persist long after the initial attack. The affected project loses the funds it needs to operate and struggles to regain users’ trust.
Preventing such incidents also requires investment in security audits, monitoring, regular maintenance, and incident response. For crypto businesses, security is not just a technical issue; it is essential to their survival.
Falling crypto prices also make existing problems worse. Token values may drop, users may withdraw their funds, and investors may become less willing to support projects.
However, funding has not disappeared from crypto. Galaxy Research indicates that crypto startups raised about $10 billion in the first half of 2026, about half of what they raised throughout 2025.
This suggests that investors are still putting money into crypto but concentrating it in fewer projects. Businesses with established revenue, useful products, and clear growth plans may continue to attract funding, while those dependent on constant fundraising are more likely to struggle.
Difficult market conditions expose weaknesses that may have remained hidden when capital was easier to obtain.
Artificial intelligence has become a major destination for startup funding, creating more competition for venture capital. Within crypto, investors are also narrowing their focus to projects they believe have stronger long-term potential.
Projects that cannot attract users or distinguish themselves from competitors may struggle to secure additional funding. They may need to find new investors, partner with another company, change their business model, or shut down.
Mergers and acquisitions are also becoming more common. Recent reports showed 87 such transactions by August 2026, a reported 65% increase from the previous year.
Although acquisitions and shutdowns are different outcomes, both can reflect a market where companies are reassessing costs and future prospects. Even projects with working technology may fail if they cannot deliver enough value to users or compete effectively.
(adsbygoogle = window.adsbygoogle || []).push({});The 82 project shutdowns do not prove that the entire crypto industry is in crisis. However, they instead highlight that funding, large deposits, and token rewards do not guarantee long-term success.
A project’s survival is different from its token’s investment performance. A useful product does not guarantee that its token price will rise, and a well-funded business is not necessarily profitable.
The challenge is to build products that people genuinely need and generate enough revenue to cover operating costs. Ultimately, crypto projects need to develop models that remain viable without relying on constant fundraising or temporary incentives.
Related: Crypto Adoption Is Growing. So Why Are Crypto Companies Laying Off Workers?
