Top 10 Failed Chains: Huge Raises, Disastrous Returns

Introduction

If you've been in crypto long enough, you've probably seen this movie before: a team raises an unimaginable amount of money, promises the world, launches with massive hype, then... within weeks everyone who bought it has lost everything. This is the same playbook people have been using since the original ICO craze in 2017-2018, amassing billions of dollars in capital for ideas that never stood a chance.

In this article, we'll go through the top 10 failed chains in crypto history, totaling $5.8 billion in funding for tokens with an average decline of 93.2%!

10. Polkadot (DOT) - $200 Million

While I can appreciate Polkadot's vision for interoperability, it really never gained the traction people hoped it would. The "Parachain" mechanism proved to be too confusing, and after hitting an ATH of $54.98, DOT now trades at $1.51 for a total decline of 97%.

9. Kin (KIN) - $100 Million

In early 2017, Kik Interactive (the messaging app) was facing bankruptcy, with cash projected to run out before the year's end. The board ended up calling a "Hail Mary" play to do an ICO, which subsequently raised $100M from private investors and the public. The token was branded as the foundation of a decentralized ecosystem of digital services, but there was a problem: none of those services existed at the time of sale.

The team eventually lost their suit against the SEC alleging they had conducted an illegal security sale, and things never really got better for the KIN token, which sits down over 99% today.

8. Starknet (STRK) - $273 Million

The ZK-rollup launched its token to immediate sell pressure after some vesting schedule shenanigans for early investors. Since then, inflation has hit hard among the broader altcoin market performing poorly, and the STRK token is down 98% from its ATH of $4.41.

7. Tezos (XTZ) - $232 Million

Tezos was supposed to be the "self-amending blockchain," no hard forks, governed entirely by its token holders. In 2017 that pitch worked, allowing them to raise $232M in what was then the largest ICO in history, even surpassing Ethereum's raise. After a series of disputes among the founders which led to further lawsuits on behalf of investors, Tezos lost its momentum and support. It had a brief comeback arc in the 2021 bull run which included partnerships with Red Bull Racing and Manchester United, however today it just sits as a technically functioning chain that nobody uses.

6. Movement Labs (MOVE) - $50M (?)

Due to the scandals around the TGE (namely an insider market-making scam), venture investors were not super excited about disclosing their investment in Movement, and thus we don't have official numbers here. Built using a version of Aptos's Move (hence the name Movement Labs), the Movement founder Rushi Manche promised a whole lot without delivering literally anything. MOVE launched at a whopping $3B valuation but within days had already dumped, now sitting at about $260M FDV.

5. Berachain (BERA) - $142 Million

Berachain existed as an inside joke for crypto traders for years with their NFTs regularly selling for hundreds of thousands, if not millions, of dollars. Despite their deep lore in the industry, the liquidity incentives that Berachain launched with proved to be confusing to average retail users, as the TVL plummeted from a $3B peak to under $200M. Since hitting a $14.83 ATH on launch day, BERA has fallen to $0.44 today.

4. Flow (Dapper Labs) - $300M+

Dapper Labs took the world by storm with NBA Top Shot, a precursor to the NFT craze which offered ownership of NBA game clips and special moments. By the time the Flow blockchain launched, however, NFT's and Top Shot had already peaked. Dapper Labs was able to raise an estimated $300M across funding rounds, which garnered enough market interest to drive the FLOW price to $46 initially – today, however, FLOW trades at $0.05.

3. Eclipse - $65 Million

An attempt at merging the best of Solana and Ethereum, Eclipse failed to improve on either. Controversy after controversy plagued the chain, and the token never went higher than its initial listing price of $0.36 – today it sits at about $0.13. Given the lack of users and major unlocks in the near future, we can probably expect Eclipse to join the -90% club at some point.

2. The Sandbox (SAND) - $95M+

The metaverse poster child rode the 2021 NFT boom to an $8.40 peak, then cratered as the "metaverse" narrative collapsed. Turns out, people aren't willing to actually pay millions of dollars to have virtual land "next to" Snoop Dogg's virtual land. In August of last year, Sandbox cut half its workforce, closed offices globally, and started chasing the launchpad narrative. Despite being a darling of last cycle, SAND currently sits 98.5% off its ATH at $0.12.

1. EOS (Block.one) - $4.2 Billion

And finally, the biggest failure in crypto history: EOS. This infamous name boasts the largest raise in crypto history at a whopping $4.2 Billion (yes, with a B) during their year-long ICO in 2018. The team attracted interest by promising TPS in the millions, but of course all the money came before there was any kind of working product. It never really went anywhere, and the EOS token is currently down over 99% at $0.09.

Wrapping it Up

Nearly $6 billion in funding across these 10 names, and yet an average decline in token price of 93%. This goes to show huge warchests, top VCs, and elite engineers aren't always the key to success. At the end of the day, most of these projects ended up biting the dust because of poor incentive models and inflationary pressures. Add in a bit of scams and scandals, and you have a recipe for disaster.

Does this mean all high-funded L1s are doomed? Not necessarily, but it is clear the market won't value their tokens just because the VCs say it should. The days of buying a coin because a16z or Paradigm are on the cap table are over, and to be honest, they probably should be.

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