Not everything is always fine and nice in paradise. For example, Cardano seemed to be doing well. Since October 2023 the $ADA token saw a good price increase. It went from $0.24 to $0.63 about a week ago. However, ever since, there seems to be trouble in paradise.
Now, in all fairness, Cardano was and is always good for a discussion. The chain has plenty of critics. For example, they can be a little Isolationist. However, this time, it appears that somebody threw a more serious spanner in the works.
AlphaQuest Research published a new report last week. It shows that Cardano is among the top chains hosting dead coins. How big a problem is this? Or there is something good happening that is being overlooked? Let’s take a closer look.
What Is the 2024 Dead Coins Report?
So, let’s start with a bit of background about this dead coins report. By now, you may or should know that the crypto space is volatile. For many projects, it can be a challenge to survive. So, AlphaQuest took it upon themselves to analyze no less than 12,000 crypto projects. Here are some major outcomes. For example, did you know that:
- Almost two-thirds of all projects already died.
- Of all projects that started during the 2020-2021 bull run, 72% didn’t make it. They’re dead.
- Crypto projects have a life span of around 3 years. That’s shorter than a crypto market cycle. In other words, they aren’t around for more than one bull run or bear market.
- Cardano and Terra are in the top projects that have the deadest coins.
Alpha Quest Criteria
Well, the latter you knew already because I mentioned it before. But still, that’s quite shocking and serious news. To get to their final results, the AlphaQuest team used four criteria. That’s how they determined if a project was dead. So, they looked at:
- Low trading volume and low liquidity.
- Inactive or deleted Twitter accounts.
- Websites that are down.
- CoinMarketCap delisted them.
Source: AlphaQuest
Now, we can consider the majority of 2023 as bear market territory. Those were tough conditions and for many projects, it was a struggle to survive. It shouldn’t come as a surprise that 65% of crypto projects died during 2023.
Let’s consider a market cycle to last for 4 years. That made 2023 the toughest year to survive in the current cycle. The number of dead coins reached 60% last year. The biggest giveaway for qualifying as a dead coin is:
- Low liquidity and/or low trading volume. 93% of the projects had this issue.
- Another 58% of dead coins had either a deleted or inactive Twitter account or website.
- CoinMarketCap delisted almost 48%.
Cardano: Dead Coins Supreme
Now, the report noted that no less than 74% of Cardano ecosystem projects were dead. That’s 5th spot in this list of 148. Other ecosystems that AlphaQuest mentions are, for example:
- Terra with 74% on 11th spot.
- Near with 63% taking the 65th spot.
- Celo ecosystem takes the 78th spot with 63%.
- Harmony ONE ecosystem with 66% in the 110th spot.
- Ziiliqa and Moonriver with 51% on respectively 140th and 141st spot.
The report shows that the average lifespan of a project is around 2,21 years. However, 11.65% don’t even make it past the first 6 months. Another 21.77% bite the bullet at the 1-year mark. Only 22.4% make it to the 4-year mark. We can also see in which categories we find the most dead projects:
- 75% are in the video & music sector.
- Another 75% are asset-back stablecoins.
- The metaverse is right up there with 51%.
I also found a list of the Cardano graveyard. That’s where Cardanocube, keeps track of failed or rugged projects. The above-mentioned categories are also included in this Cardano list. 5 For the record, Cardanocube is a Cardano block explorer. Here is their graveyard list and their graveyard or archive.
This graveyard list shows that Cardano has taken some hard hits. Some dead projects are in line with the top categories. For example, the metaverse. At the end of 2022, Cardano also saw their Ardana stablecoin project come to a grinding halt.
Source: AlphaQuest
It’s Not All Doom and Gloom
But, it’s not all doom and gloom in the Cardano ecosystem. Some projects thrive. Take, for example, Wanchain. They built the first, and as far as I know, the only decentralized bridge to Cardano. Wanchain takes it even a step further. They are trying to connect MetaMask to their Cardano bridge.
Wanchain received a Cardano grant and is testing as we speak. It’s a mechanism to trigger on-chain logic on Cardano from EVM networks using any EVM wallet. 4 It allows you to buy native Cardano assets in MetaMask. Once this works, devs can apply it to their Dapps. As a result, this opens up access for Cardano users to billions of liquidity on EVM chains.
That looks good! Another positive is the $ADA price development. I already touched briefly on that, earlier on. The current $ADA price is $0.7396. That’s still 5x away from $ADA’s ATH of $3.09 in September 2022. On the other hand, $ADA is up by 61% over a year.
It’s currently dipping a bit, like most coins. It has a marketcap of $26 billion. $ADA still ranks in the top 10 by marketcap. However, there are still 10 billion tokens not in circulation out of a maximum supply of 45 billion.
So, like I said before, it’s not all doom and gloom. There are also positive things happening in the Cardano ecosystem. 6 Wanchain could be an important player for Cardano to improve access. In turn, this can result in better app performance in the future.
Do you have a favorite Cardano project? Let me know in the comments which one you like best.
