The Era of Crypto Project Shakeout: The Essence of Market Mechanisms That Eliminate the Weak

In observing the development of the crypto economy over the past few years, it becomes clear that the market is reaching a fundamental turning point. After peaking with excessive optimism in 2021 and then declining, the market sentiment has bottomed out, and a new phase is taking shape. Essentially, this phase is characterized by outstanding projects beginning to shine while many mediocre tokens are being淘汰ed from history. What does this淘汰 mean? It is nothing other than the inevitable selection mechanism driven by market maturity and capital efficiency.

The crypto economy is no longer a playground for speculation but has evolved into a stage for real value creation. The massive influx of institutional investors, clearer regulatory environments, and the full-scale adoption of blockchain technology by major companies—these factors interact to increase pressure to eliminate weaker players more than ever before.

The Gap Between Expectations and Reality: Why Most Tokens Were淘汰ed

In 2021, how much the crypto asset class exceeded market expectations was beyond many people’s imagination. The market cap multiples of DeFi blue-chip companies reached 500x, evaluations of eight smart contract platforms surpassed $100 billion, and speculation in NFTs and the metaverse reached an extreme.

However, more intriguing is that Bitcoin began to lose its status as “digital gold.” Since 2021, Bitcoin’s relative price against gold has not reached new highs; in fact, it has declined. As the dollar systematically depreciates and even in the United States, the world’s largest crypto city, where a strong ETF has been approved, Bitcoin has lost its former glory.

Most projects had structural issues when entering this cycle:

• Many tokens’ revenues are cyclical and highly dependent on ever-increasing asset prices
• Regulatory uncertainty hinders participation by institutional investors and corporations
• The dual structure of stocks and tokens creates misaligned internal incentive mechanisms
• Insufficient information disclosure causes serious asymmetries between teams and communities
• The lack of a unified valuation framework leads to excessive market volatility and loss of fundamental price support

As these issues compounded, the prices of most tokens plummeted, with only a few winners barely reaching the highs of 2021. This experience caused deep frustration, as many felt that “sustained effort would not be rewarded.” Consequently, the dreams of speculators who saw cryptocurrencies as a shortcut to wealth shattered, and a professional fatigue spread across the industry.

This is indeed a healthy survival of the fittest. The era where mediocre efforts could generate extraordinary returns and where “air tokens” with no real value could amass huge wealth was unsustainable.

Why the Market Awoke: True Use Cases Are Sorting Top Projects

The key is that these problems have been widely recognized, and the market has responded. After years of pain, the crypto economy has begun to acquire the necessary conditions to rise again.

Beyond Bitcoin as digital gold, use cases that generate real value are growing exponentially. This industry has produced tangible results such as:

• Peer-to-peer financial platforms: systems that enable transactions without government or corporate intermediaries, with smart contracts automating contractual relationships
• Global payment infrastructure: enabling low-cost, reliable currency storage and transfer worldwide via the internet
• Permissionless exchanges: 24/7 trading of top-tier assets on transparent, single platforms globally
• Advanced derivatives tools: providing efficient price discovery mechanisms through prediction markets and perpetual futures
• Global collateral markets: establishing transparent, automated platforms for unpermissioned credit
• Decentralized asset issuance platforms: allowing individuals and institutions to issue tradable assets at very low costs
• International financial platforms: enabling global fundraising beyond regional economic constraints

Many of these use cases have demonstrated real value and continue to grow steadily regardless of market fluctuations. The important point is that the market is finally beginning to recognize this reality.

Simultaneously, clearer regulation and increased awareness among founders are correcting the dual structure of “stocks-tokens.” Excellent projects are attributing on-chain revenues to token holders and off-chain revenues to stockholders, aligning incentives. Furthermore, the maturing of third-party data providers is improving information disclosure practices, enhancing market rationality.

The market is gradually reaching consensus: 99.9% of assets must generate cash flow, and assets like Bitcoin and Ethereum, which serve as stores of value, are the rare exceptions.

The淘汰 Mechanism Driven by Intensified Competition: Institutional and Corporate Entry Eliminates Weak Players

Platforms like Ethereum, Solana, and Hyperliquid are rapidly emerging as foundational infrastructures for internet finance. Their permissionless design and global distribution capabilities have enabled applications built on them to evolve into some of the fastest-growing businesses worldwide. With unparalleled capital efficiency and rapid revenue turnover, these platforms are likely to become the backbone of the “financial super app” market.

Wall Street and Silicon Valley giants are accelerating blockchain initiatives. New products are announced weekly, spanning tokenization, stablecoins, and various other areas. Notably, these are not mere experiments but production-level products, many built on public blockchains.

This activity is expected to accelerate further as regulatory clarity reduces delays. Companies and institutions are shifting from asking “Is this legal?” to “How can blockchain expand revenue, reduce costs, and unlock new business models?”

This shift will ruthlessly淘汰 weaker players. In all emerging tech sectors, about 90% of startups fail, and the crypto economy is no exception. The entry of institutions and large corporations will eliminate more mediocre projects from the market. The meaning of this is—not just failure, but market efficiency and the formation of mechanisms that allow top projects to concentrate resources.

Even industry analysts hesitate to predict exponential growth. To avoid appearing overly optimistic, many professionals (both sellers and buyers) refrain from forecasting annual growth rates exceeding 20%. Therefore, after several years of valuation resets, if exponential growth truly occurs, its benefits will be concentrated among a limited number of winners.

The Dual Nature of a Once-in-a-Lifetime Opportunity and淘汰: Conditions for Projects to Survive the New Era

The future of the crypto economy may be inevitable. However, this inevitability intensifies competition and increases pressure for results more than ever. As a result, many weaker players are destined to be淘汰ed.

What is crucial here is not to fear this淘汰 process but to understand the conditions for survival. Conditions for excellent projects:

• Genuine use cases and compound value growth
• Consistent on-chain revenue and transparent information disclosure
• Regulatory compliance enabling participation by institutional investors and corporations
• Global distribution capabilities and permissionless design

Projects equipped with these qualities will not only survive the big waves but may even benefit from the increasing competition.

The world is finally beginning to recognize the value of the parallel systems it has built. As long as issues like unsustainable sovereign debt, declining trust in institutions, and the retreat of globalization persist, demand for blockchain technology will continue to grow.

Skepticism is rational, but cynicism is not. Rebuilding the governance of currency, finance, and economic institutions is undoubtedly challenging. Yet, it is also filled with excitement and potential.

Amid the fog of disillusionment and uncertainty, there are unprecedented opportunities. But they are only available to those willing to embrace the dawn of a new era—those who do not lament the end of the old. In this era of market淘汰, the ability to discern true value is the most critical skill for investors.