Crypto projects are not only collapsing through headline-grabbing hacks or spectacular bankruptcies anymore. Increasingly, they are shutting down quietly after years of weak revenue, falling token prices and failed attempts to raise more money.
A new Cointelegraph feature highlights a growing wave of shutdowns across trading platforms, analytics tools, DAO infrastructure and Web3 services. The pattern is uncomfortable because many of these projects did not fail from one dramatic mistake. They slowly ran out of options.
That is what makes the current wave important. It suggests crypto’s old funding model, launch a token, build a community, subsidize usage and hope liquidity arrives, is no longer enough.
The Token Flywheel Is Losing Power
Tokens Once Bought Time
In earlier cycles, tokens gave crypto startups a powerful advantage. A project could raise capital from venture investors, launch a token, build incentives around it and use market demand to extend its runway.
When prices were rising, that model looked brilliant. Tokens could attract users, reward early adopters, fund operations and create a public market for a project before the underlying business had matured.
But that model depends heavily on market appetite. When liquidity dries up, the same token that once looked like an engine becomes a weak balance-sheet asset.
Many projects entered the downturn with treasuries concentrated in their own tokens or other correlated crypto assets. As prices fell, their runway shrank. Venture funding became more selective. Secondary-market liquidity thinned. New token issuance became harder to justify.
Weak Utility Is Now Being Exposed
The biggest problem is not simply that token prices are down. It is that many tokens never developed strong enough utility to support a real business.
If a token does not represent a clear claim on revenue, governance power users care about, network access, fee discounts or a necessary role inside the product, it becomes mostly a speculative instrument. That can work in a bull market. It becomes much harder when users and investors become more selective.
Dmail is one recent example. The decentralized email service said it would shut down after facing high infrastructure costs, weak monetization, failed fundraising and limited token utility. That is a telling combination. It was not just a funding problem. It was a business-model problem.
Shutdowns Are Happening Across Different Corners of Crypto
Dmail, Tally and Step Finance Tell Different Versions of the Same Story
Dmail’s closure shows the pressure on Web3 consumer apps that must pay real infrastructure costs while waiting for token-based adoption to materialize.
Tally’s shutdown tells a different story. The DAO governance platform said the market for governance tooling had not developed at venture scale. Tally had supported more than 500 DAOs, including major names such as Uniswap and Arbitrum, but even visible infrastructure can struggle if the market is too narrow to support a large business.
Step Finance shows the security side of the problem. The Solana DeFi platform shut down after a major January hack drained tens of millions of dollars from its treasury. The team said efforts to find financing or a sale did not produce a viable path forward.
These are different failures, but they point to the same reality. Once a crypto project loses capital, user momentum or investor confidence, recovery is difficult.
Across Shows Some Projects Are Trying a Different Path
Not every project is simply shutting down. Across Protocol has explored a token-to-equity transition, with Risk Labs proposing a path that could move the project away from its existing token and DAO structure toward a more traditional corporate model.
That proposal is important because it shows some teams are trying to escape the limits of token governance. Risk Labs argued that the current DAO and token structure made it harder to close enterprise and institutional deals.
This is a major cultural shift. Crypto spent years arguing that tokenized communities were the future of company formation. Now, some teams are asking whether traditional equity and corporate structure may be more practical for certain businesses.
Crypto Still Lacks a Real Restructuring Playbook
Token Holders Often Have No Clear Rights
Traditional companies have bankruptcy courts, creditor hierarchies, restructuring advisers and formal mechanisms to reorganize obligations. Crypto projects often have none of that.
Many operate through a mix of foundations, offshore entities, DAOs, token holders, users, venture investors and service companies. When things go wrong, it is not always clear who has a claim on what.
Token holders may feel like owners, but in many cases they do not have legal ownership of the business, cash flows or treasury assets. They can vote on governance proposals, but that does not necessarily give them enforceable recovery rights if the project winds down.
That creates a brutal outcome during stress. If a project cannot raise money, cannot sell itself and cannot reorganize claims, the default option is often a shutdown.
DAOs Can Be Too Fragmented to Save Themselves
DAOs are supposed to let communities coordinate capital and governance. In practice, they can become slow and fragmented exactly when speed matters most.
When a crisis hits, stakeholders may disagree over whether to raise money, sell assets, cut costs, merge, issue more tokens or wind down. Token holders, equity investors, founders and users may all want different outcomes.
Without a clear legal structure, enforcing a restructuring plan becomes difficult. A corporate board can approve a sale. A court can bind creditors. A DAO vote may express preference, but it may not solve every contractual or legal problem.
That is why some distressed crypto projects do not restructure. They simply fade.
The Market Is Becoming More Ruthless
The shutdown wave is also a sign of market maturity. Investors are no longer willing to fund every project with a token, a Discord and a roadmap.
That is painful, but it may be healthy. Crypto needs fewer projects built around vague token utility and more projects with real users, real revenue and clear governance.
The next generation of crypto startups may need to answer harder questions from day one. What does the token actually do? Who has legal rights? How is the treasury diversified? What happens if the token falls 80%? Can the project survive without incentives? Is there a path to revenue that does not depend on bull-market speculation?
Those questions used to sound conservative. Now they sound necessary.
What This Means for Investors and Users
For investors, the lesson is that token market cap is not the same as business health. A project can have an active token and still lack sustainable revenue, strong governance or a restructuring path.
For users, the lesson is to pay attention to project runway and communications. If a platform depends on token incentives, has weak fee generation or keeps delaying funding updates, that can be a warning sign.
For founders, the lesson is even clearer. Token launches should not be treated as a substitute for product-market fit. A token can bootstrap growth, but it cannot permanently hide weak demand.
What Comes Next
The next phase will likely bring more shutdowns, especially among projects with small treasuries, low token liquidity and limited real revenue.
At the same time, more teams may explore token buyouts, mergers, equity conversions or hybrid structures that combine crypto communities with traditional corporate tools. Across Protocol’s proposal may not become the standard, but it points to where the conversation is heading.
Crypto is not running out of innovation. It is running out of patience for token models that do not work under pressure.
The projects that survive this cycle will probably look less like pure token experiments and more like durable businesses with clear legal structures, disciplined treasuries and tokens that serve a real purpose.
