How did star projects turn into a "swimming shortcut": a lesson ten years after the 2021 investment boom

Remember 2021—this was the most glorious era of the crypto industry. Bitcoin surpassed $60,000, Ethereum reached a historic high, and virtual avatars were traded in the millions. The word “Web3” boosted confidence in any project with that name, and any project with such a name could immediately earn tens of millions of dollars. During that period, venture capital conglomerates invested a total of $25.2 billion into crypto startups—an increase of 713% from $3.1 billion in 2020.

The fate of star projects today: Many have lost themselves

But history does not forgive reckless actions. Looking at the over 400 projects that received the most investment, very few are still active. Many have disappeared: some nearly liquidated themselves, others were hit by hacker attacks and did not recover, and some turned into “zombie” projects, living quietly in virtual peace.

Referring to the table, out of the 400 projects that received the most investment in 2021, 67 representative projects have already closed or lost their value completely. Over $5 billion in total funding was poured into these projects. The most painful fact: most of their market capitalizations fell below the levels of their 2021 investment rounds.

The dominance of centralized finance platforms

The heaviest blow was dealt to centralized finance platforms. FTX once received $1.32 billion in investments and was considered a star platform in the industry. But in November 2022, its scandal shook the entire ecosystem, and the founder’s fraud scandal revealed the frightening consequences of high promises and unemployment.

Similarly, Celsius Network also went into decline during that period. This credit platform received $750 million in investments and promised users an 18% annual return. But it was left without liquidity crisis, and its CEL token plummeted from $8 to $0.02—losing 99.73% of its value.

Platforms like BlockFi, Voyager Digital, Babel Finance were thought to mark the “formalization” and “institutionalization” of crypto finance, but instead, they collapsed one by one in the domino effect of 2022. They had collectively received over $500 million in investments.

NFT and metaverse: Disillusionment and the fading of fantasy

If the collapse of centralized finance platforms was a fraud, the mass disappearance of NFT and metaverse projects resembles the collapse of a single illusion in society.

In 2021, everyone was talking about virtual land, digital art, and “play-to-earn” games. The concept of Axie Infinity scared many—receiving $159.5 million in investments, with the AXS token soaring to $164.9. In-game NFT animals were sold for hundreds of thousands of dollars. Thousands of people in the Philippines and other developing countries left their jobs to engage in “gold mining.” Only a few years later, after the economic model of the game collapsed, the AXS token began to fall sharply—by 99.49%, dropping to $0.85. The harsh truth for players: it was always a Ponzi scheme that relied on constantly bringing in new users, as only women realized today.

The Sandbox was another representative of the metaverse concept, receiving $93 million in investments. Its virtual land NFTs sold like hotcakes in 2021, and the SAND token soared to $8.4. After three years, this “metaverse” is almost abandoned—events are held infrequently, the official Twitter is still being updated, but the comment section has already disappeared.

Lessons from star projects: Learning to recognize real value

Applying the lessons of 2021 to today reveals bitter truths:

Most importantly:

• Most projects are just cycle products—initial investment inflow, then complete disappearance
• Projects that create real value do not exceed 5% of the total ratio
• These 5% projects are usually identified at the lowest point of the bear market

The cycle turns, 2025 is approaching, and a new cycle is beginning. When the new wave of investments comes, will we know when today’s star projects turn into “shorting” opportunities? If history does not repeat itself, it will certainly continue in its own way.