When the "dead wave" engulfs the dreams of 2021 — what happened to the mega-funded projects?

We all remember that euphoria. Bitcoin was breaking barriers, Ethereum was making history, and every project with a “Web3” label was gathering tens of millions effortlessly. In 2021, the cryptocurrency sector experienced an unprecedented boom — venture capital funds feared missing out on the next “moonshot.” The statistics speak clearly: crypto startups raised $25.2 billion, a 713% increase compared to 2020. Those were crazy times.

Four years later comes the “dead wave” — a reality that washes away illusions. Of over 400 best-funded projects from that period, the vast majority have disappeared. Failed, bankrupt, or turned into virtual zombies — projects with no signs of life. Out of 500 top startups from 2021, 67 representative cases have failed or show minimal activity, with the total invested amount exceeding $5 billion.

Centralized financial platforms — a business model disaster

The first victims are the so-called institutional financial solutions. Lending platforms that promised users astronomical returns collapsed like house of cards. One of them raised $750 million and guaranteed an 18% annual return, trusted by hundreds of thousands of people. Its token dropped from $8 to $0.02 — a 99.73% loss.

Similarly, lending platforms that supposedly regulated and “institutionalized” the sector failed. BlockFi, Voyager Digital, Babel Finance — names that in 2021 promised safety and professionalism. They collectively took over $500 million in funding and collapsed in the liquidity crisis of 2022 in a domino effect. The biggest spectacles often precede the biggest failures.

NFTs and Metaverse — the dissolution of collective illusion

The second front of failure involved the entire NFT and Metaverse ecosystem. In 2021, everyone talked about virtual plots, digital art, and earning through gaming. Play-to-Earn projects gathered crowds of enthusiasts.

An example of this is Axie Infinity — a game that raised $159.5 million on the “earn by playing” concept. Its AXS token reached a price of $164.9. In developing countries, especially the Philippines, thousands of people quit their regular jobs to work full-time earning virtual gold in this game, seeing it as a chance to change their lives.

However, it turned out to be a system requiring an endless influx of new players — a financial pyramid. When the model collapsed, AXS fell by 99.49% to $0.85. People who invested their entire savings learned a bitter lesson: earning without intrinsic value is an illusion.

Similarly, flagship metaverse projects followed suit. One of them raised $93 million, and its virtual NFT plots in 2021 were sold out, with the token reaching $8.4. Today, that world is empty. Sporadic events attract a handful of participants, and the comments section on social media is completely dead.

Lesson at the end: 5% create real value

Analyzing the ruins of that cycle reveals a brutal truth: most are speculative products of one season, and projects creating lasting value constitute less than 5%. Those few can usually only be recognized when the market drops to its lowest.

History repeats itself. 2025 is nearing its end, and a new cycle is already underway. When the next “dead wave” subsides, how many of today’s frontrunners will turn out to be “dressed in swimwear” — beautiful in the sun but without foundations in the storm?