- Ethereum-focused startups in 2022 and beyond have been more successful than Solana-based projects.
- Entrepreneurs who chased popular stories like Web3 Games ended up paying the price.
- VCs are expected to pour $12 billion into crypto startups in 2024.
In the contest to build DeFi projects, Etherem-based startups have an advantage over Solana startups.
About a fifth of Ethereum projects have shut down in the past two years, according to a report from venture capital fund Lattice. This is better than the 26% of Solana projects founded.
Researchers examined the blockchains of at least 15 crypto startups that raised funding during 2022.
BNB chain-based projects were the least likely to remain active, with one-third of teams inactive.
speculative capital
Lattis said the influx of speculative money during the bull market led to projects being overextended.
According to the founders' official statement in the closure notice, many of these projects blamed the brutal decline in the market caused by events such as the collapse of the Terra ecosystem and the FTX bankruptcy as the reason they were forced to shut down.
The report also noted that nearly 80% of seed-stage Ethereum-based startups ship products after 2022, and the same could be said for just over 60% of Solana projects.
Solana's price has risen 32% this year, but the report is a somber reminder of the two brutal years ahead for the cryptocurrency ahead of its 2024 rally.
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Due to the market crash, interest in VC follow-up waned.
Investors poured more than $5 billion into nearly 1,200 crypto startups in 2022, a 150% increase from 2021, according to Lattice.
This is lower than DefiLlama's $19.5 billion figure, but this figure is derived from an extensive calculation of crypto VC transactions, whereas Lattice is only a blockchain-based company with at least 15 projects securing funding. was considered.
Almost 30% or $1.4 billion went to seed Ethereum-based startups, and the early-stage Solana project raised 7% or $350 million.
Topics such as NFTs, Metaverse, and Web3 gaming drove capital inflows. Naturally, many crypto entrepreneurs decided to take advantage of these trends, but they may have been wrong.
“Following the story can restore your sanity,” Lattice Capital co-founder Regan Bozeman tweeted. “$700 million was put into seed rounds for games, but Gaming and Metaverse had the highest failure rate and were more likely to go active without shipping anything.”
gravy train
When scandals and industry failures dampened the excitement, the gravy train stopped running. This has made it difficult for startups to raise more funds. Only 12% of the 2022 cohort received follow-up funding.
72% of teams that raised funding launched products after 2022, while 18% failed to ship or were shut down.
Ethereum-based startups at the time were the most successful in shipping products, with 80% of them successfully shipping products, compared to only 61% of Solana-based startups.
The situation is improving
As DL News previously reported, VCs are expected to spend $12 billion to back crypto projects in 2024, and some of that money could go toward seeding new startups. expensive.
Lattice has identified increased investments in privacy-enhancing technology, artificial intelligence, and DePIN, which stands for decentralized physical infrastructure network.
Earlier this year, global asset manager Franklin Templeton recommended Solana as a leading network for DePIN.
Osato Abang Nomayo is a DeFi correspondent based in Nigeria. He covers DeFi and technology. To share tips or information about your story, contact us at: oSat@dlnews.com.
