Zombie Cryptos Are Booming In The Last Months

Sad Ethereum

✍️ 4 October, 2022 - 9:07 👤 Editor: Jakub Motyka

A total of 12,100 crypto projects have become inactive due to the ongoing bearish market, according to a research published by Nomics. The number compares to 3,700 in 2021 and 1,500 in 2020.

The data shows a significant jump since the early years of blockchain technology. 2019 saw 766 projects turn to Zombies, while 2018 had 136, as per the report. Nomics has defined a zombie project as one that has not been wholly wiped off, but is neither active.

Generally, almost all blockchain projects have digital assets as utility. The tokens act as incentives to network validators. When the crypto space saw a boom last year, startups issued such tokens in huge volumes. The bullish market caused them to enter the crypto space quickly.

Adverse Macroeconomic Factors Has Turned More Cryptos Into Zombies

Negative macroeconomic factors rocked the crypto space in 2022. A high inflation rate attracted hawkish steps by the central banks, including rates hikes. The move forced investors to diversify away from riskier assets like cryptos.

The trend is also visible among venture capital firms, which no longer invest in budding digital assets projects. It was witnessed with the collapse of lending platforms like Voyager Digital, Celsius, and BlockFi.

CryptoCompare analyst, Jacob Joseph, opined that there was a lot of money in circulation during the crypto boom. He adds that the current bearish market has caused all the projects, including the legitimate ones, to struggle. Joseph perceive that there is a lack of capital inflows into the industry.

Most Affected Projects Are The Meme Tokens

Nomics co-founder Nick Gauther echoed the sentiments. The executive observed that the most affected projects are the Meme tokens and those meant for fun. One such project is Elonmoon, a blockchain platform related to moon exploration. The meme token currently has a warning note on CoinMarketCap.

A similar project, BoomSpace, no longer operates a website and has not updated its social media pages since June. From more than 60,000 projects tracked by Nomics, 13,800 barely had any trading volumes in the past 24 hours.

Crypto expert, Aaron Brown, observed that the process of cryptos turning into zombies happens slowly. He added that there is often no sign that a token is becoming one. Brown said that, with the startup cost of a project often almost negligible, the sector is attracting all and sundry.

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